2004 (3) TMI 368 - AT - Income Tax

Summary

Issues Involved:
1. Imposition of Penalty under Section 271(1)(c) of the Income-tax Act, 1961.
2. Validity of Revised Return filed under Section 139(4) of the Act.
3. Allegation of Concealment or Furnishing of Inaccurate Particulars of Income.

Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c) of the Income-tax Act, 1961:
The appeal arose from an order confirming a penalty of Rs. 14,000 imposed by the Assessing Officer (AO) under Section 271(1)(c) of the Income-tax Act, 1961. The assessee initially declared business income of Rs. 1,26,878 and later revised it to Rs. 1,68,930. The AO initiated penalty proceedings, asserting that the assessee furnished inaccurate particulars of income in the original return. The AO noted that the original return showed a net profit of 6.3%, which was below the 8% threshold under Section 44AD, leading to compulsory scrutiny. The assessee failed to produce supporting documents, and the AO deemed the revised return as an admission of furnishing inaccurate particulars, justifying the penalty.

2. Validity of Revised Return filed under Section 139(4) of the Act:
The ld. CIT(A) examined whether the assessee had the right to revise the return filed under Section 139(4). Referring to the Supreme Court's decision in Kumar Jagdish Chandra Sinha v. CIT, it was concluded that the assessee cannot revise a return filed under Section 139(4). The original return, filed belatedly, could not be revised under Section 139(5). The ld. CIT(A) held that the revised return was non est in law and that the AO could not have accepted it, even if he wished to.

3. Allegation of Concealment or Furnishing of Inaccurate Particulars of Income:
The ld. CIT(A) also addressed the contention that there was no concealment or furnishing of inaccurate particulars since the revised return was filed before any detection by the AO. Citing the Allahabad High Court's decision in Bhairav Lal Verma v. Union of India, it was held that the revised return was not filed voluntarily but under the constraint of impending scrutiny. The assessee was found to have taken a chance by initially showing a lower income, hoping the case would not be picked for scrutiny. The ld. CIT(A) noted that the assessee failed to produce books of account and other documents, and the revised return was an attempt to comply with Section 44AD after realizing the inability to substantiate the original income.

Conclusion:
The Tribunal upheld the penalty, agreeing with the ld. CIT(A) that the revised return was non est and that the assessee furnished inaccurate particulars of income. The Tribunal noted that the assessment was completed on the revised income, which would have been determined by the AO under Section 44AD regardless. The Tribunal dismissed the appeal, affirming that the original return showed an intentionally lower income without substantiation, justifying the penalty under Section 271(1)(c).