2011 (3) TMI 1835 - AT - Income Tax

Summary

Issues Involved:
1. Levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961.
2. Concealment of income and furnishing inaccurate particulars of income.
3. Validity and voluntariness of the revised returns filed by the assessee.
4. Applicability of case law and precedents in determining the bona fides of the revised returns.

Detailed Analysis:

1. Levy of Penalty u/s 271(1)(c):
The core issue revolves around the levy of penalty under section 271(1)(c) of the Income-tax Act, 1961, for concealment of income and furnishing inaccurate particulars of income. The Revenue levied penalties for the assessment years 2003-04 to 2005-06, which were contested by the assessee and initially found favor with the CIT(A).

2. Concealment of Income and Furnishing Inaccurate Particulars:
The assessee, a professional urologist, initially filed returns that did not disclose the full income earned from professional services, particularly from Apollo Hospitals. The Department's investigation revealed that the hospital collected fees on behalf of the doctors, including the assessee, and paid them after deducting 10% for infrastructural charges. These amounts were not recorded in the hospital's or the assessee's accounts, indicating deliberate concealment. The assessee later filed revised returns admitting additional income, but this was after the Department's investigation had uncovered the concealment.

3. Validity and Voluntariness of the Revised Returns:
The assessee argued that the revised returns filed on 15.3.2006 were bona fide and voluntary, thus not warranting penalty. However, the Revenue contended that these returns were not voluntary but were filed in response to the Department's investigation. The Tribunal found that the original returns were attended with deliberateness, and the revised returns were filed as a pre-emptive measure after the Department's investigation had already detected the concealment. Therefore, the revised returns could not be considered voluntary or bona fide.

4. Applicability of Case Law and Precedents:
Both the Revenue and the assessee relied on various case laws to support their arguments. The Tribunal referenced several judgments, including:
- Cement Marketing Co. Ltd. vs. Asst. CST (1980) 124 ITR 15 (SC): This case was cited by the CIT(A) to support the view that in the absence of deliberateness, the default would not justify the levy of penalty.
- CIT vs. Suresh Chandra Mittal (2001) 251 ITR 9 (SC): The CIT(A) referenced this case to argue that even if the revised return was filed beyond the time allowed under section 139(5), it could still be valid in the context of disclosure.
- Ayyasoami Nadar & Bros. v. CIT, 30 ITR 565 (Mad.) and Sivagaminatha Moopanar, 52 ITR 591 (Mad.): The Revenue relied on these cases to argue that the revised returns were not voluntary and were filed after the Department had already detected the concealment.

The Tribunal concluded that the revised returns were not voluntary and were filed only after the Department's investigation had uncovered the concealment. Therefore, the assessee's action did not exhibit bona fides, and the penalty under section 271(1)(c) was justified.

Conclusion:
The Tribunal found that the original returns filed by the assessee were false and attended with deliberateness, constituting concealment of income. The revised returns filed by the assessee were not voluntary but were a pre-emptive measure in response to the Department's investigation. Consequently, the Tribunal upheld the levy of penalty under section 271(1)(c) for the assessment years 2003-04 to 2005-06, setting aside the orders of the CIT(A) and allowing the Revenue's appeals.