2021 (5) TMI 50 - HC - Income Tax

Penalty u/s 271(1)(c) - Revised return filed consequent to search and seizure operations under Section 132 - difference between the return of income originally filed and subsequently filed under Section 153A - reason which prevailed with the ITAT for setting aside of the said penalty was that neither the notice under Section 271(1)(c) of the Act nor the order imposing penalty specified which of the alternatives was being invoked i.e. whether of concealment of particulars of income or furnishing of inaccurate particulars of such income - HELD THAT - The statute under Section 153A of the Act having itself providing for an option to be given to the assessee to file a revised return of income whether the provisions of Section 271(1)(c) of the Act would apply with respect to the return of income as originally filed or to the revised return of income pursuant to opportunity under Section 153A of the Act. Prima facie it appears that once the statute itself has given an opportunity to the assessee the provisions of Section 271(1)(c) of the Act should apply to the revised return of income. The appellant refers to Explanation 5A to Section 271 of the Act to contend that Section 271(1)(c) of the Act would apply to the original return of income filed and not to the revised return of income. The notice issued under Section 271(1)(c) of the Act is not placed on record. We would like to see the said notice to satisfy ourselves that the notice fulfilled the requirements of Explanation 5A supra also.The counsel for the appellant is requested to before the next date of hearing file a compilation of all the judgments on aforesaid aspects as well as the notice under Section 271(1)(c) of the Act issued to the respondent as well as any other document which may be relied upon during the hearing.

Summary

Issues:
- Appeal against ITAT order imposing penalty under Section 271(1)(c) of the Income Tax Act, 1961.
- Interpretation of whether penalty for concealment of income or furnishing inaccurate particulars was invoked.
- Applicability of penalty provisions to original or revised return of income under Section 153A of the Act.
- Examination of Explanation 5A to Section 271 regarding the application of penalty provisions.

Analysis:
1. The appeal challenged the ITAT's decision to set aside a penalty of ?2,13,18,000 imposed on the respondent under Section 271(1)(c) of the Income Tax Act, 1961. The ITAT's reasoning for setting aside the penalty was the lack of specification in the notice or order regarding whether the penalty was for concealment of income or furnishing inaccurate particulars, citing relevant judgments from the High Court of Karnataka and the Delhi High Court.

2. The respondent filed a return of income for the Assessment Year 2007-08, leading to search and seizure operations under Section 132 of the Act. Subsequently, a revised return was filed under Section 153A of the Act, resulting in the imposition of the penalty, which was later set aside by the ITAT. The appellant argued that the substantial difference between the original and revised returns indicated that the penalty was for concealment of income.

3. The court deliberated on the applicability of penalty provisions to the original or revised return of income under Section 153A of the Act. It was observed that since the statute provides the option to file a revised return, the penalty under Section 271(1)(c) should apply to the revised return. The appellant referred to Explanation 5A to Section 271 to support the application of the penalty to the original return.

4. The absence of the notice issued under Section 271(1)(c) of the Act on record raised concerns, prompting the court to request the appellant to provide the notice and compile relevant judgments and documents for review before the next hearing. The court scheduled the next hearing for 25th May, 2021, indicating the need for further examination and clarification on the issues raised in the appeal.