9911796707
TMI Blog1999 (12) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... her sources Rs. 1,70,911 Total ----------------------- Rs. 5,08,426 Deductions under Chapter VI-A Rs. 31,330 ----------------------- Total income Rs. 4,77,100 ----------------------- The assessment was completed on the total income of Rs. 4,98,200 vide order dated 28th February, 1994 in the course of which penalty proceeding under section 271(1)(c) was initiated. 3. In response to the Show Cause Notice, it was submitted on behalf of the assessee vide letter dated 19th August, 1994 that there was no mala fide intention to conceal the particulars of income as the sum of Rs. 1,02,000 was paid by way of advance tax attributable to the capital gain and further tax was deducted at source on salary and dividend income. The reasons for failure to file the return was explained as under :--- "Sir, in the year 1985-86, your assessee left the job with Rapicut Tools Pvt. Ltd. and undertaken big Project to manufacture the Carbon, Tools by setting up a Public Ltd. Co. Rapicut Carbide Ltd. He took this challenge against a multination FERA Company Sandvik Asia. He wanted the country to save the drain of Foreign Exchange. While doing so he has to undergo number of problems and has to face t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue i.e. the decision of Madras High Court in the case of S. Santhosa Nadar v. First Addl. ITO [1962] 46 ITR 411, still did not accept the same by observing that income-tax code cannot be static one. According to her, it is to be understood in the context of the facts in a particular case. Further, changes in section 271 brought by Direct Tax Laws (Amendment) Act, 1989 should be taken into consideration. The decision of the Madras High Court in the case of S. Santhosa Nadar was distinguished by her in the following words : "In the new scheme, penalty for failure to file the return under section 271(1)(a) has been deleted. Section 271(1)(b) also does not exactly require the filing of the return since penalty is exigible even for failure to comply with the notice under section 142(1) requiring the assessee to file the return. Section 271(1)(c) continues in its earlier form. Thus section 271 has changed materially. In Santhosa Nadar it was the setting in which sub-clause (c) was placed that it was concluded that a return was to be furnished before concealment could be said to be established. The same conclusion can in my view no longer be derived from the present setting o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the capital gain. On the other hand, the Ld. D.R. has relied on the reasonings given by the CIT(A) and therefore need not be repeated. 6. Rival contentions of the parties have been considered carefully. The scheme of the Act has also been gone into. The issue for consideration before us is whether penalty for concealment of particulars of income can be levied under section 271(1)(c) where it is shown that assessee would not have filed the returns but for the issue of notice under section 148. In other words whether non-furnishing of return within the stipulated period under section 139 tantamounts to concealment of the particulars of income. The words "concealment" or "conceal" have not been defined in the Income-tax Act, 1961. The meanings of those words as defined by various dictionaries are stated below: "As per Webster's Dictionary: Conceal - To prevent disclosure or recognition of, avoid revealation of, refrain from revealing, withhold knowledge of, draw attention from, treat so as to be unnoticed, to place out of sight, withdraw from being observed, shield from vision or notice. Concealment - The act or practice of concealing, the state of being concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 provides for furnishing of return in various forms depending upon the status of the assessee. The said returns provide the particulars of income which are to be furnished in respect of various types of income assessable under various heads. The notes appended to the returns also prescribed the various details of income to be furnished by the assessee along with the return. The combine reading of the aforesaid provisions, rules and the prescribed returns shows that particulars of income are required to be furnished by the assessee in the return or along with the return. No other manner is prescribed by the statute for disclosing the particulars of income. The context in which language is used by the Legislature shows that it is the act of commission of default which is subject to penalty and not act of omission. Therefore, we are of the considered opinion that concealment of particulars of income, if any, has to be seen with reference to the return of income and not in any other manner. If the assessee files the return without disclosing the particulars of income, then it can be said that assessee had concealed the particulars of income. But where no return is filed, it is difficu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... berately inaccurately furnished. The use of the expression "particulars of his income" and 'particulars of such income" would be wholly in apposite in a case where no return has at all been filed; such a case would clearly come within the scope of section 28(1)(a) alone. The further penal provisions of section 28(1)(c) appear also to support the above view. In a case of a total failure to furnish a return, the penalty which may be imposed upon the assessee would be an amount not exceeding one and a half times the income-tax and super-tax, if any, payable by him, in addition to any tax payable by him. But in a case which comes under section 28(1)(c), in addition to any tax payable by him, the maximum penalty that can be imposed is a sum not exceeding one and a half times the amount of income-tax and super tax, if any, "which would have been avoided if the income returned by such person had been accepted as the correct income". Not only has the Legislature linked the quantum of the penalty to the amount of tax which would have been avoided by the concealment or furnishing of inaccurate particulars, but the concluding portion of section 28(1) itself indicates that in the cases fallin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it would have specifically provided so. The view of Madras High Court was very well known to the Legislature. There was no contrary view of any other High Court on this issue. If the Legislature intended to nullify completely the effect of such decision, it could have included the existing assessee also within the ambit of the aforesaid Explanation 3. Therefore, even after 1-4-1989, it cannot be said that non-furnishing of return within the stipulated period under section 139 by the existing assessees would tantamount to concealment of the particulars of income. 10. In view of the aforesaid discussion, it is held that there cannot be concealment of the particulars of income on account of non-furnishing of return within the stipulated time under section 139 except in the circumstances mentioned in Explanation 3 to section 271(1)(c). In the present case the income in respect to which penalty has been levied was duly disclosed in the return filed under section 148. The assessee being existing assessee is also not covered by the said Explanation. Therefore, it cannot be said that the assessee concealed the particulars of income on account of non-furnishing of return. There may be v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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