2013 (9) TMI 691 - AT - Income Tax

Penalty u/s 271(1)(c) of the Income Tax Act - Revised return of income was filed by the assessee on November 24, 2008 in which additional income was declared by the assessee Assessee in a statement confessed regarding this investment out of additional income as declared by the assessee in the revised return of income filed on November 24, 2008 Held that - Notice issued by the Deputy Director of Income-tax (Investigation) under section 131 of the Income-tax Act, 1961 on November 20, 2008, there is no indication regarding any adverse material having brought out on record by the Department regarding any concealment of income by the assessee - Assessee s explanation is this that this investment was made out of past savings but on receipt of this notice under section 131 of the Income-tax Act, 1961, the assessee consulted a chartered accountant who advised the assessee to file revised return of income and include additional income in the same to cover this investment since he was not in a position to substantiate his explanation that the investment was made out of past savings. Reliance has been placed upon the Hon ble Tribunal decision in the case of Deputy CIT v. Dr. Satish B. Gupta 2010 (8) TMI 641 - ITAT, AHMEDABAD , wherein it has been held that question of considering whether the assessee is liable for action under section 271(1)(c) would arise only when return of income is scrutinised by the Assessing Officer and he finds some more items of income or additional income over and above what is declared in the return. Also, assessee would be liable for action under section 271(1)(c) in respect of such items only which are discovered by the Assessing Officer on the scrutiny of return of income or after carrying out investigation and discovering some more items of income not found declared or mentioned in the return of income Following the above judgment and various other judgments cited by assessee, penalty is deleted Decided in favor of Assessee.

Issues Involved:
1. Legality of penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Whether the revised return filed by the assessee was voluntary or a result of enquiry.
3. Consideration of evidence and submissions by the Commissioner of Income-tax (Appeals).
4. Applicability of judgments cited by both parties.

Detailed Analysis:

1. Legality of Penalty under Section 271(1)(c):
The main issue revolves around the legality of the penalty levied under section 271(1)(c) for the assessment year 2008-09. The Assessing Officer imposed the penalty on the grounds that the assessee had concealed income by not declaring an investment of Rs. 5 lakhs in Kotak Mahindra Life Insurance Ltd. in the original return but included it in the revised return. The Commissioner of Income-tax (Appeals) upheld this penalty, stating that the revised return was not voluntary but a result of an enquiry by the Additional Director of Income-tax (Investigation).

2. Voluntariness of the Revised Return:
The assessee argued that the revised return was filed voluntarily and based on the advice of their chartered accountant. However, the Department contended that the revised return was filed only after the issuance of a notice under section 131, implying that it was not voluntary. The Tribunal examined the sequence of events and found that the revised return was filed on November 24, 2008, before the statement under section 131 was recorded on November 28, 2008. The notice under section 131 merely asked for the production of documents and did not indicate any adverse material against the assessee.

3. Consideration of Evidence and Submissions:
The Tribunal noted that the Commissioner of Income-tax (Appeals) had failed to fully consider the submissions and evidence provided by the assessee. The Tribunal emphasized that the revised return was filed in time and included the disputed amount, which should negate the penalty for concealment of income. The Tribunal also highlighted the assessee's explanation that the investment was made from past savings, and the revised return was filed on the advice of a chartered accountant due to the inability to substantiate this explanation.

4. Applicability of Judgments:
The Tribunal considered various judgments cited by both parties. The assessee relied on the Gujarat High Court judgments in BTX Chemical P. Ltd. v. CIT and CIT v. Shankerlal Nebhumal Uttamchandani, which supported the view that penalty under section 271(1)(c) is not justified if the revised return is filed before any adverse material is discovered by the Department. The Department cited judgments from the Gauhati, Kerala, and Madras High Courts, arguing that the revised return was not voluntary. However, the Tribunal found these cases distinguishable on facts, particularly noting that in the present case, there was no specific adverse material or questionnaire from the Department before the revised return was filed.

Conclusion:
The Tribunal concluded that the revised return was filed voluntarily and in good faith, based on professional advice, and before any adverse material was discovered by the Department. Therefore, the penalty under section 271(1)(c) was not justified. The Tribunal allowed the appeals of the assessees and deleted the penalties in all three cases.

← Previous Next →