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Issues Involved:
1. Levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961. 2. Validity of revised returns filed after the issue of notice u/s 143(2) of the Act. Summary: Issue 1: Levy of Penalty u/s 271(1)(c) of the Income-tax Act, 1961 The primary issue in these appeals is the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 on the amounts of cash loans disclosed by the respective assessees in their revised returns filed after the issue of notice u/s 143(2) of the Act. The Assessing Officer (AO) issued a notice u/s 271(1)(c) as the assessees did not establish the identity or creditworthiness of the persons from whom cash loans were received nor the genuineness of transactions. The AO contended that the revised returns were invalid as they were filed after the issue of notice u/s 143(2) and levied penalties accordingly. On appeal, the CIT(A) upheld the levy of penalty, stating that the filing of the revised returns was not voluntary and was done only after the case was selected for scrutiny. The CIT(A) emphasized that the burden was on the assessee to declare true income in the original return filed u/s 139(1) and that the revised returns were filed only after the proceedings for scrutiny were initiated. Issue 2: Validity of Revised Returns Filed After Issue of Notice u/s 143(2) The assessees argued that the revised returns were filed voluntarily to buy peace and avoid litigation, relying on the decision of the Hon'ble Supreme Court in CIT v. Suresh Chandra Mittal (2001) 251 ITR 9 (SC). However, the AO did not accept this contention, stating that the revised returns were invalid as they were filed after the issue of notice u/s 143(2). The Tribunal found that neither the assessment order nor the penalty order contained any material suggesting that the differential income declared in the revised returns was detected by the Department before the assessees furnished the revised returns. The Tribunal noted that the CIT(A) had canceled the penalty in similar cases where returns were revised before the issue of notice u/s 143(2), but upheld the penalty in these cases simply because the returns were revised after the issue of notice. The Tribunal concluded that the levy of penalty u/s 271(1)(c) was not justified as there was no positive proof of concealment. The Tribunal emphasized that the burden was on the Department to prove that the assessees had concealed the particulars of income and that the amounts added represented the income of the assessees. The Tribunal referred to various judicial precedents, including the decision of the Hon'ble Supreme Court in Suresh Chandra Mittal, to support its conclusion that the revised returns were filed in good faith and to buy peace, and therefore, no penalty could be levied. Conclusion: The Tribunal vacated the findings of the CIT(A) and canceled the penalties levied by the AO. The appeals were allowed, and the penalties u/s 271(1)(c) were deemed unjustified as the revised returns were filed voluntarily before any detection of concealment by the Department. The Tribunal emphasized the need for the Department to prove concealment with positive evidence, which was not done in these cases.
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