2013 (5) TMI 328 - HC - Income Tax

Benefit of immunity - u/s 271(1)(c) clause (2) of explanation-5 - The question is, is it the requirement of the law that the return should be filed before the due date, in order to get the benefit of immunity? Held that - In order to get benefit of immunity under clause (2) of explanation-5 to section 271(1)(c) of the Act, it is not necessary to file the return before the due date provided that the assessee had made a statement during the search, explained the manner in which the surrendered amount was derived, and paid tax as well as the interest on the surrendered amount. In the present case all conditions as detailed in clause (2) to explanation-5 were satisfied. Therefore assessee was entitled to the immunity. Thus, the appeal has no merit it is dismissed.

Summary

Issues:
1. Whether filing the return before the due date is necessary to get the benefit of immunity under clause (2) of explanation-5 to section 271(1)(c) of the Income Tax Act, 1961.

Analysis:

Facts:
The Income Tax Department conducted a search on the Assessee's premises, who later surrendered an amount and made a statement regarding the surrendered income. The return for the assessment year was filed belatedly, including the surrendered income. The Assessing Officer imposed a penalty for concealing income based on the Explanation.

Decision: Not Necessary to File Return Before Due Date:
The court deliberated on whether the return must be filed before the due date to avail immunity under the Explanation. It was noted that the Assessee filed the return after the due date but had made a statement during the search, explained the source of the surrendered income, and paid the tax with interest. The court emphasized that the legal fiction under the Explanation treated the surrendered amount as concealed income, but immunity clauses provided exceptions.

Precedents and Interpretations:
The court referenced the Gebilal case, emphasizing the conditions for immunity under clause (2) of the Explanation. It highlighted that the Supreme Court did not mandate filing the return before the due date. Additionally, the court cited the Madras High Court's observation that the time specified in section 139(1) reiterated the normal filing requirement, not a mandatory condition for immunity.

Conclusion:
The court concluded that filing the return before the due date was not necessary to obtain immunity under the Explanation. As the Assessee had fulfilled all conditions under clause (2) of the Explanation, including making a statement during the search and paying taxes, the Assessee was entitled to immunity. The appeal was dismissed as the Assessee met all requirements for immunity, rendering the penalty unjustified.

This detailed analysis showcases the court's interpretation of the legal provisions, precedents, and factual circumstances to arrive at a conclusion regarding the necessity of filing the return before the due date for availing immunity under the Income Tax Act.