2023 (12) TMI 1265 - HC - Income Tax

Penalty u/s 271(1)(c) - revised returns were not valid returns u/s 139(5) and that, such returns were not voluntarily filed rather the same were filed only after detection of concealment of income during the course of the survey conducted in the hospital - as argued appellant filed revised returns admitting additional income after payment of tax in relation thereto - CIT(A) deleted the penalty - ITAT restored the penalty - as submitted that before issuance of show cause notices, the appellant had filed the returns voluntarily showing additional income and there is no concealment or escapement of income to tax and hence, penalty u/s 271(1)(c) inflicted on the appellant, is erroneous and not sustainable in law - AO held that revised return was not a valid return under section 139(5) and accordingly, levied penalty under section 27(1)(c) HELD THAT - This court is of the opinion that this is a case of deliberate omission in the first return and further, the second return filed by the appellant is not a voluntary one, as rightly held by the ITAT. Therefore, this court does not find any reason to interfere with the order passed by the ITAT. Accordingly, all these Tax Case Appeals are dismissed and the substantial questions of law are answered against the appellant and in favour of the revenue.

Summary

Issues Involved:
1. Whether the revised returns filed by the appellant were voluntary or prompted by the survey conducted by the Department.
2. Whether the levy of penalty under Section 271(1)(c) of the Income-tax Act was justified.

Summary:

Issue 1: Voluntariness of Revised Returns
The appellant, a doctor, filed revised returns for the assessment years 2003-04, 2004-05, and 2005-06, admitting additional income after a survey was conducted at Apollo Hospitals. The appellant argued that these revised returns were voluntary and filed before the issuance of summons under Section 131 and notices under Section 148 of the Income-tax Act. However, the Tribunal found that the revised returns were filed only after the survey revealed unaccounted fees, and thus, were not voluntary. The Tribunal held that any disclosure of income by the assessee, after the discovery of falsity in the original returns, cannot be regarded as voluntary.

Issue 2: Justification of Penalty under Section 271(1)(c)
The Assessing Officer imposed a penalty under Section 271(1)(c) for concealment of income, stating that the revised returns were not valid under Section 139(5) and were filed only after detection during the survey. The CIT(A) deleted the penalty, relying on the Supreme Court's decision in CIT v. Suresh Chandra Mittal, which considered regularisation of invalid revised returns upon issuance of notice under Section 148. However, the ITAT restored the penalty, emphasizing that the revised returns were an afterthought and not voluntary. The ITAT cited several legal precedents, including Sivagaminatha Moopanar & Sons v. CIT and Pr.CIT v. Dr. Vandana Gupta, which held that revised returns filed post-survey are not voluntary and cannot exonerate the assessee from penalty.

Conclusion:
The High Court upheld the ITAT's decision, dismissing the appeals and affirming the penalty under Section 271(1)(c). The court concluded that the revised returns were not voluntary and were filed only after the survey detected concealed income. The substantial questions of law were answered against the appellant, and the penalty was deemed justified.