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TMI Blog1993 (9) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer obtained approval for issuing notice under s. 148 for the above assessment years and served on the appellant on13th Feb., 1989. The appellant replied to the above notice on 16th March, 1989, saying that, he had filed the returns on 18th Jan., 1989, and those returns may be treated as filed in response to the notice under s. 148 of the Act. The returns as filed on18th Jan., 1989, were treated as filed in response to the notice under s. 148 and the assessments were completed on29th Dec., 1989. 3. The Assessing Officer initiated penalty for concealment of incomes for the various assessment years, with specific reference to Expln. 3 to the s. 271(1)(c) of the Act. The appellant replied to the notice stating that, he had filed the return before he was served with the notice under s. 148 and merely because, the return came to be regularised consequent to the notice under s. 148, it could not be equated to a situation of return being filed in response to a notice under that section and, therefore, Expln. 3 was inapplicable. The appellant further had said that, the law requires disclosure before the issue of notice under s. 139(2) of the Act, but, does not necessaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1986-87 were concluded much before the issue of the notices under s. 148 for the various assessment years under appeal, Expln. 3 would not apply to the assessee. He accordingly cancelled the penalty imposed for all the assessment years. 6. On the above mentioned facts, the Revenue had come up in appeal before us. The Departmental Representative Smt. Anuja contended that, the return that was filed on 18th Jan., 1989, by the assessee, for the various assessment years under appeal, are not valid returns, because, they could not be classified as returns filed under either under s. 139(1) or 139(2) or 139(4) of the Act and the Assessing Officer, could not have obtained any jurisdiction to act on those returns, because, the time limit for passing of the assessment orders for those assessment years had expired long time back. She contended that, the returns, therefore, are non est in the eye of law. The returns as filed had been regularised only after the issue of the notice under s. 148 of the Act and, therefore, it has been rightly treated as filed in pursuance to the notice so issued. She contended that, the assessee would not have filed the return on18th Jan., 1989, but, for the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Expln. 3 of s. 271(1)(c) of the Act and submitted that, the words 'where any person who has not been previously assessed to income-tax', cannot be read in isolation but, entire section has to be read together. She pleaded that, the words 'who has not been previously assessed' coupled with the words the time available to frame assessments, suggests the situation that existed during the limitation period for framing the assessments and on expiry of it, all subsequent events such as issue of notice under s. 148, compliance of it, assessment made are all irrelevant consideration, if it is found by the Assessing Officer that income had escaped assessment, the assessee is deemed to have concealed income and the penalty is automatic. She pleaded that, in the instant case, the first of the assessment was framed in 1988, which is more than five, four, three and two years after the expiry of the limitation period for framing of the assessment for the above stated assessment years and, therefore, the concealment is established and penalty is automatic. 9. The counsel for the appellant, Shri Ashok Kumar contended that, the circumstance that existed at the time when the action under s. 148 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act would get attracted or not. 11. Sec. 271(1)(c) and the Expln. 3, are reproduced below, for appreciating the controversy in the instant case: 271. (1) If the ITO or the AAC in the course of any proceedings under this Act, is satisfied that any person (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, (iii) in the cases referred to in cl. (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice the amount sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income: Provided that, if in a given case falling under cl. (c), the amount of income (as determined by the Assessing Officer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty-five thousand rupees, the Assessing Officer shall not issue any direction for payment by way of penalty without the previous approval of the Dy. Commissioner. Explanation 3 : Where any person who has not previousl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn by issue of a notice under s. 139(2), only when he has on his record the assessment particulars for any assessment year, which would show continuity of receipt of income for the subsequent assessment years. For a non-existing assessee, he would be served with a notice under s. 148 of the Act, only when he has in his possession some information about the person having income, but had not cared to file any return of income. Therefore, there is no doubt in our minds that, the plain reading of the Expln. 3, clearly emphasises on the fact of the assessee not being assessed at the point he had committed the default of not filing the return of income. 14. The third of the rider provides that, the assessee should have filed any return of income for any assessment year, before the expiry of the limitation period for framing of the assessment for that assessment year. This has been provided, because, the s. 139(4) of the Act, permits an assessee to file a return any time before that limitation period expires, in which event, the assessment could be framed within one year from the end of the assessment year. In the instant case, for none of the four assessment years, the assessee had f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt only by the issue of the notice under s. 148 of the Act and regularising the return and treating it as a return filed in pursuance to the notice under s. 148 of the Act. It is pertinent to observe that, the intention behind the introduction of penal provisions, is to provide a deterrent to a tax payer, compelling him to comply with the obligations that are cast upon him by the Act. If an assessee, who files a return within the normal course, is assessed at a higher figure than what was returned by him as his income and is also levied penalty for concealment, would be dissuaded from filing any return in normal course, if it is to be held that, he would not be liable for penalty for concealment of income, even when he chooses to file the return after the expiry of the time limit for completion of the assessment. If such interpretation is allowed then, it would result in none of the tax payers feeling it their duty to comply to the time schedule prescribed under the Act for filing of the return, and there would be no assessment possible within the prescribed limit, which is nothing but negating the Act or making the Act unworkable. Any interpretation that makes the Act unworkable, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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