2013 (7) TMI 524 - HC - Income Tax

Penalty u/s 271- Whether the Tribunal was right in deleting the penalty levied by the AO levied by the u/s.271(1)(c) and the Tribunal has failed to appreciate the fact that the assessee filed revised return only after the case was selected for scrutiny and after issue of a questionnaire and as such, the additional income disclosed by the assessee in revised return was not voluntary - Held that - There could be no penalty because the liability to penalty and filing of the revised return are mutually exclusive - court relied upon the decision of CIT v. Shankerlal Nebhumal Uttamchandani (2008 (3) TMI 309 - GUJARAT HIGH COURT) - reason given for filing revised return was that most of the business was looked after by his brother who was in a position to comply with the details and since he was no more in this world he opted to file revised return tribunal is legally and factually correct in canceling the penalty and committed no error in deleting the penalty appeal decided against revenue.

Summary

Issues:
Penalty deletion under Section 271(1)(c) - Appellate Tribunal's jurisdiction in deleting penalty.

Analysis:
1. The primary issue in this case revolves around the penalty of Rs.12.61 lac imposed by the Assessing Officer, which was subsequently deleted by the Commissioner of Appeals and upheld by the Tribunal. The case involved the assessee filing a revised return declaring additional income of Rs.37 lac during the assessment under Section 143(3) of the Income Tax Act, 1961.

2. The Commissioner of Appeals deleted the penalty by emphasizing that the liability to penalty under Section 271(1)(c) and filing of a revised return under Section 139(5) are mutually exclusive. Citing judicial precedents, the Commissioner concluded that if a revised return is filed before the detection of concealment, no penalty is leviable. The Tribunal upheld this decision, highlighting the reasons provided by the assessee for filing the revised return.

3. The Tribunal noted that the assessee filed the revised return to buy peace and avoid prolonged litigation after the demise of his brother, who managed the business affairs. The additional income disclosed in the revised return covered loans taken and errors in the original return. The Tribunal found no error in the Commissioner's decision to cancel the penalty, considering the circumstances and legal principles.

4. The High Court affirmed the Tribunal's decision, emphasizing that the Tribunal correctly deleted the penalty based on the facts and circumstances of the case. The Court referred to a previous judgment where it was held that if undisclosed income is detected before filing a revised return, the penalty can be deleted. The Court clarified that the Tribunal did not err in deleting the penalty in this case, as there was no evidence that the revised return was filed due to detection of inaccurate particulars by the Assessing Officer.

5. The High Court clarified that it did not endorse the Commissioner's view that filing a revised return within the time limit prescribed under Section 139(5) automatically precludes the imposition of a penalty. The Court left open the possibility of revisiting this issue in the future. Ultimately, the Tax Appeal was dismissed based on the above observations and the consistent application of legal principles in the case.