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2014 (2) TMI 801 - HC - Income TaxEntitlement to file a revised return Search and seizure u/s 132(1) of the Act Notice u/s 158BC issued Requirement to file return for undisclosed income - Revenue was of the view that as the assessee had already furnished return under Section 158BC thus the income disclosed by the assessee was treated as concealed income in terms of Section 158BFA of the Act Held that;- The provision contained in second proviso to Section 158BC of the Act is mandatory, the undisclosed income even if disclosed by the assessee, after the filing of the return u/s 158BC by filing a revised return, would be liable to be treated as concealed income and hence, incur penalty - the assessee cannot file even a revised lower return on account of some mistake committed by him and thus, the second proviso to Section 158BC is intended at prohibiting the assessee from filing a revised higher return with a view to get away with imposition of penalty on the undisclosed income - The plea taken by the assessee that penalty could not have been imposed on the additional undisclosed income disclosed by the assessee itself, is fallacious - Merely because the disclosure of additional undisclosed income was made by the assessee prior to any notice from the Assessing Officer would not lead to a presumption that the Assessing Officer could not have detected the concealed income. Second proviso to Section 158BC is mandatory and the provision under Section 158BFA is also mandatory subject to the conditions mentioned - thus, the intention of the assessee is immaterial Relying upon Chairman, SEBI Vs. Shriram Mutual Fund and Anr. 2006 (5) TMI 191 - SUPREME COURT OF INDIA - An assessee is not entitled to file revised return, once the return under Section 158BC is filed - The provisions under Section 158BFA is also mandatory and therefore, irrespective of the intention of the assessee, the undisclosed income disclosed by the assessee after filing the return under Section 158BC, would attract penalty - The plea of non-supply of documents is not available to the assessee for filing a revised return though, such a plea may be available to the assessee for challenging the final order on the ground of violation of the principles of natural justice thus, the matter remitted back to the CIT(A) for fresh consideration - Decided in favour of Revenue.
Issues Involved:
1. Legality of imposing penalty under Section 158BFA of the Income Tax Act. 2. Interpretation and application of the second proviso to Section 158BC of the Income Tax Act. 3. Validity of the assessee's claim regarding non-supply of documents by the Department. 4. Consideration of the assessee's intention and bona fide disclosure of additional income. Issue-wise Detailed Analysis: 1. Legality of Imposing Penalty under Section 158BFA: The Revenue challenged the CIT (Appeals) and Tribunal's decision to reject the penalty imposed by the Assessing Officer under Section 158BFA. The Tribunal held that no material evidence showed the assessee was provided with photocopies of the seized materials before filing the return. The Tribunal concluded that the additional income disclosed by the assessee was not concealed income as per Section 158BFA. However, the High Court held that the second proviso to Section 158BC is mandatory, and any undisclosed income revealed after filing the return should be treated as concealed income, thus attracting a penalty under Section 158BFA. 2. Interpretation and Application of the Second Proviso to Section 158BC: The Revenue argued that once a return under Section 158BC is filed, the assessee is not entitled to file a revised return. The Tribunal's interpretation that the second proviso to Section 158BC is only for assessment purposes and does not attract penalties was found erroneous by the High Court. The High Court emphasized that the second proviso is mandatory, preventing the assessee from filing revised returns to avoid penalties. 3. Validity of the Assessee's Claim Regarding Non-Supply of Documents: The assessee contended that the delay in filing the return was due to the Department's failure to provide the necessary documents. The Tribunal accepted this argument, stating that the assessee was not provided with the seized materials in time. However, the High Court found no substantial evidence to support this claim, noting that the assessee had made multiple requests and was eventually allowed to take photocopies. The High Court concluded that the plea of non-supply of documents was not valid for filing a revised return but could be used to challenge the final order on natural justice grounds. 4. Consideration of the Assessee's Intention and Bona Fide Disclosure of Additional Income: The Tribunal and CIT (Appeals) accepted the assessee's argument that the additional income was disclosed voluntarily and in good faith before any notice from the Assessing Officer, implying no malafide intention. The High Court, however, ruled that the intention of the assessee is immaterial under the mandatory provisions of Section 158BC and 158BFA. The High Court cited precedents from the Supreme Court, emphasizing that penalties are attracted as soon as statutory obligations are violated, regardless of intention. Conclusion: The High Court set aside the orders of the CIT (Appeals) and the Tribunal, remitting the matter back to the CIT (Appeals) for fresh consideration. The Court held that the second proviso to Section 158BC is mandatory, and any undisclosed income revealed after filing the return under Section 158BC should be treated as concealed income, attracting penalties under Section 158BFA. The plea of non-supply of documents was deemed insufficient to justify filing a revised return. The appeal by the Revenue was allowed, emphasizing the strict application of the statutory provisions.
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