2013 (2) TMI 121 - HC - Income Tax

Penalty u/s 158BFA (2) - search and seizure u/s 132 in the case of appellant s wife at her premises - Block assessment under section 158 BC completed - Held that - Appellant has not filed the return within the meaning of clause (1) to the proviso. The return filed being Nil return, he cannot also lay store by the revised return filed earlier. The law is very clear that the party seeking protection from the penalty must file return pursuant to notice under section 158 BD. Appellant concedes that Nil return filed does not satisfy the proviso. On a perusal of the provisions contained in the proviso, it is clear that requirements which are to be satisfied are cumulative. The law contemplates that on receipt of notice under section 158 BD, the party must file return disclosing the income. He must pay the tax or he must offer that the money seized may be adjusted against the tax payable. He must provide the evidence for tax paid along with the return in clause (iii). Also notice the presence of the word and after clause (iii) which is followed by clause (iv) which deals with the last of four requirements to be fulfilled by the assessee, namely, that he should not appeal the assessment of that part of income shown in the return. The provisions of clause (iv) clearly indicate that he must not file any appeal against that part of income which is shown in the return. This signifies that the assessee must indeed file a return and not a Nil return and that all the clauses must be fulfilled. Therefore,there is no merit in the appeal - against the asseessee.

Summary

Issues:
- Challenge to order of Income Tax Appellate Tribunal affirming penalty under section 158BFA(2) of the Income Tax Act, 1961.
- Interpretation of proviso to section 158BFA regarding imposition of penalty.

Analysis:
The appellant contested the order passed by the Income Tax Appellate Tribunal, which upheld the penalty imposed under section 158BFA(2) of the Income Tax Act, 1961. The case stemmed from a search and seizure conducted at the premises of the appellant's wife, leading to the discovery of documents related to the appellant. Subsequently, penalty proceedings were initiated, and the appellant objected to the penalty imposed by the Officer. The First Appellate Authority and the Tribunal affirmed the penalty, prompting the appellant to appeal the decision.

The primary issue raised for consideration was whether the Tribunal erred in not considering the appellant's cooperation with the Department during the assessment proceedings as a ground to waive the penalty under section 158BFA(2). The appellant argued that no basis existed for imposing the penalty, highlighting the filing of a revised return for the assessment years post the search date. However, the Court noted that the revised return was filed after the search, and the statutory provisions limited the timeframe for filing revised returns. The Court then delved into the interpretation of the proviso to section 158BFA, which outlines conditions for penalty imposition.

The appellant's counsel contended that the appellant's offer to adjust the seized money against the tax due satisfied the requirements of the proviso. Reference was made to a previous judgment emphasizing that penalty imposition is the norm unless specific conditions are met. Conversely, the Revenue's counsel cited a judgment to support their position. The Court, after thorough analysis, found no merit in the appellant's arguments. It was established that the appellant did not file a return as required by the proviso, and a 'Nil' return did not fulfill the statutory obligations. The Court emphasized that the conditions stipulated in the proviso were cumulative, necessitating the filing of a return disclosing income, payment of tax, and non-filing of appeals against the assessed income shown in the return.

In conclusion, the Court dismissed the appeal, ruling against the appellant. The judgment underscored the importance of complying with statutory requirements, particularly regarding the filing of returns and meeting the conditions specified in the proviso to section 158BFA for protection against penalty imposition.