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2015 (3) TMI 638 - AT - Income TaxPenalty levied u/s.271(1)(c) - revised return filed - CIT(A) deleted penalty levy - Held that - As far as the question that whether the return was revised suo motu prior to any notice from the Revenue Department, we hereby hold that in the light of the evidences filed from the side of the Revenue in the form of paper book there was sufficient evidences that Revenue Department had issued notices prior to the filing of the revised return; therefore, merely on that ground penalty cannot be deleted. But on the other hand, we are of the view that in a situation when the quantum as disclosed in the revised return was not found to be incorrect or indicate the concealment of income and that the assessee further suffered losses therefore in one of the case an alternate tax procedure u/s.115JB adopted, we hereby hold that in all these cases it was not justified to hold that there was concealment of income on the part of the assessee. We have noted that the assessee has adopted the recourse of avoiding litigation, therefore, revised the return to buy peace of mind. We have also noted that merely on the basis of a third party statement the impugned action was taken against the assessee. There was no incriminating material recovered from the factory premises of the Assessee so as to establish that the particular income was deliberately concealed by the Assessee; hence under the totality of all those circumstances as discussed in detail hereinabove, we hereby confirm the findings of learned CIT(A), both legal as well as factual and dismiss the grounds of the Revenue. - Decided in favour of assessee.
Issues Involved:
1. Whether the revised returns filed by the assessees were voluntary or prompted by detection from the Revenue Department. 2. Whether the penalties under Section 271(1)(c) of the Income Tax Act were justified. 3. The impact of Central Excise Department's search and third-party statements on the revised returns and penalties. 4. The applicability of legal precedents and statutory provisions in the context of the case. Detailed Analysis: Issue 1: Voluntariness of Revised Returns The Tribunal initially confirmed the deletion of penalties, stating that the assessees filed revised returns without any detection by the Department, and no statutory notices under Sections 142 or 143 had been issued before the revised returns were filed. However, the Hon'ble Gujarat High Court found this observation unsupported by facts, noting that notices had indeed been issued prior to the filing of revised returns. The High Court remanded the matter back to the Tribunal for fresh consideration, directing it to examine other aspects of the penalty issue. Issue 2: Justification of Penalties under Section 271(1)(c) The Revenue argued that the revised returns were filed only after the detection of concealment by the Central Excise Department and after the issuance of notices by the Revenue Department. The Revenue cited several legal precedents to support the imposition of penalties, including MAK Data (P) Ltd. Vs. CIT and ACIT Vs. Radhey Shyam. The Tribunal, however, noted that the revised returns were accepted by the Assessing Officer (AO) without any additions, raising the question of whether penalties were justified when the quantum of income disclosed in the revised returns was accepted. Issue 3: Impact of Central Excise Search and Third-Party Statements The Revenue highlighted that the revised returns were prompted by the Central Excise Department's search and the statement of a third party (partner of Crompton Industries), which admitted to unaccounted sales and purchases. The Tribunal noted that no incriminating material was found from the assessees' premises, and the additions were based on third-party statements. The Tribunal emphasized that the assessees revised their returns to avoid litigation and buy peace of mind, rather than due to direct detection of concealment by the Revenue Department. Issue 4: Applicability of Legal Precedents and Statutory Provisions The Tribunal referred to several legal precedents, including the decision in Kiritbhai Dayabhai Patel Vs. ACIT, which held that penalties under Section 271(1)(c) cannot be levied on the income shown in the return filed under Section 153A. The Tribunal also referenced the CIT(A)'s reliance on precedents like Suraj Bhan and Suresh Chandra Mittal, which supported the view that revised returns filed to avoid litigation should not attract penalties. Conclusion: The Tribunal concluded that the revised returns were filed voluntarily to avoid litigation and that there was no direct evidence of deliberate concealment of income by the assessees. The Tribunal upheld the CIT(A)'s findings and dismissed the Revenue's appeals, confirming that penalties under Section 271(1)(c) were not justified in these cases. The Tribunal emphasized the absence of incriminating material from the assessees' premises and the reliance on third-party statements, which did not conclusively prove concealment of income. Consequently, all appeals of the Revenue were dismissed.
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