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TMI Blog2010 (11) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome with regard to interest income for Rs. 4,73,305 and investment in fixed deposits for Rs. 22,78,000. 2.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) ought not to have held that the appellant had filed invalid revised return of income and it was not voluntary. 2.3 The ld. CIT(A) has grievously erred in holding that the revised return was neither valid nor filed for a bona fide omission. 2.4 The observations made and conclusion reached by the CIT(A) so as to confirm the penalty under section 271(1)(c) are not admitted by the appellant in so far as the same are contrary to the facts on record or prejudicial to the appellant. 2. The facts of the case are that assessee is earning income from interest and share from partnership firm. He filed return of income on30-11-2006 showing total income at Rs. 3,60,800. It was processed under section 143(1). In this return assessee had shown interest income of Rs. 129 only. Subsequently the Assessing Officer received information from Bank of Baroda as a part of routine annual information return (AIR in short) filed by the bank for Financial Year 2005-06 wherein it was found that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 22,79,000 infixed deposits with the bank of Baroda. The said investment is not reflected in the return of income filed. Kindly show cause as to why the same should not be added to your income as unexplained investment.....". After receiving this notice the assessee furnished a reply to the Assessing Officer on 10-6-2008 which for the sake of convenience is reproduced as under :- "To The Income-tax Officer, Ward 11(3), Ahmedabad. Dear Sir, Ref: No. Wd 11(3)/C14291)/KAS-83/2008-09 dated12-5-2008 Sub: Assessment proceeding for Asst. Year 2006-07 Please refer to the above. In this connection, we have to state as under :- That my father is a senior citizen of the age of about 70 years and all his financial transactions & filing of return etc. are taken care by me, the son of assessee. In the year under consideration also, the details of return was provided by me. Due to his age, he is also suffering from some age related illnesses. In the year under consideration, at the time of ending also he did have blood clout in his brain. Due to which he could not remember anything properly and could not identify the persons properly. He also got check up and Brain CT Scan etc. at tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35/40 years and there are no dues in the name of assessee in the Income-tax Department. The assessee is hereby surrendering the income as above to buy mental peace and to co-operate department and to avoid litigation. The assessee has already paid the tax of Rs. 11,54,700 due after considering the above surrender of the income on 4-6-2008 vide challan No. 00007 with Bank of Baroda BSR code 0200327. The copy of receipt of tax paid is enclosed herewith. We are also enclosing herewith the revised return for the year after considering the above income surrendered and also the claim of TDS deducted by payer and taxes paid as above along with the statement of total income, original TDS certificates and proof of payment of taxes. Further stated that TDS of Rs. 48,277 has been deducted by the payer bank on Bank FD interest of Rs. 4,73,305 paid to the assessee in the year under consideration. The said FD interest income has been surrendered by us for Asst. Year 2006-07 as above and will be interest income for Asst. Year 2006-07. Therefore we request you to please give the credit of the same TDS certificates in accordance with section 199 of the Income-tax Act. According to the section, "A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CIT v. Sudharshan Silks and Sarees [2003] 253 ITR 145 and that of the Tribunal in the case of Smt. Neetaben Tribhavandas Patel v. ITO 88 ITD 202, the Assessing Officer proposed an addition of unaccounted interest income of Rs. 4,73,305 and the undisclosed investment in FD of Rs. 22,78,000. He also initiated penalty proceedings under section 271(1)(c). The assessment order so framed including therein the investment in FD and interest income thereon was not contested. During the course of penalty proceedings the assessee furnished reply dated9-1-2009 which reads as under : "....That assessee is a senior citizen of the age of about 70 years and all his financial transactions and filing of return etc. are taken care of his son of assessee. In the year under consideration also, the details of return was provided by his son. Due to his age, he is also suffering from some age related illnesses. In the year under consideration at the time of ending also he did have blood clout in his brain. Due to which he could not remember anything properly and could not identify the persons properly. He also got check up and brain CT scan etc. at that time, the copy of the ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that disclosure is voluntary and was to buy peace. According to him concealment has been detected by the department and, therefore, it is a fit case for levy of penalty. The Assessing Officer accordingly levied penalty of Rs. 9,31,000 100 per cent of the tax sought to be evaded. The ld. CIT(A) confirmed the levy of penalty by holding that - (1) On the date of filing of original on30-11-2006, the assessee was not so seriously ill or critical. He was discharged from hospital on6-3-2006. (2) Interest income was credited in the account of assessee on various dates and TDS was deducted on payment of such interest. There were several transactions of such deductions of tax and transfer of interest income to the account of assessee. Total number of transactions were about 32 as per list given on pages 13 & 14 of CIT(A)'s order. Such TDS was made on 9 different dates. (3) Filing of return on10-6-2008is neither voluntary nor valid under section 139(5). A valid revised return could be filed only upto31-3-2008. (4) The so called revised return was filed after the Assessing Officer issued a show-cause notice to the assessee on 12-5-2008. The assessee has not disclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not received but only credited in the bank and, therefore, son was actually not knowing. (ii) Merely receiving information from Bank of Baroda in the annual information return does not amount to any discovery of undisclosed income. The Assessing Officer cannot form any prima facie satisfaction as to the said income whether it was undisclosed or not. (iii) Since assessee was almost not knowing what was filed in the original return he could not be charged for any contumacious conduct. (iv) Assessee is not maintaining any books of account and no personal balance sheet is prepared therefore, son could not know the actual financial position of the assessee. The son only considered the income from partnership firm. He was not aware of any investment made by the assessee. (v) The assessee is a senior citizen of the age of 70 years and doing business for last 35/40 years. The assessee had made savings out of household withdrawals and small receipts out of social customs. All these receipts had grown up to this extent. However, to buy peace and to cooperate with the department assessee has surrendered entire investment made in FD and interest income therefrom and paid taxes thereon for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings account of the assessee and TDS was made thereon as per details given by the ld. CIT(A) on pages, 12,13 & 14 of the impugned order. The assessee submits that he was ill, hospitalized for couple of days in March, 2006. He had to undergo CT scan of the brain, but it was in September, 2008. However, the assessee continued to enjoy share income from partnership firm and he attended all other necessary family duties and business. It was not a case that assessee was not able to communicate with any of his family member including his son or it is not a case where son of the assessee has certified or filed an affidavit that return of income on behalf of assessee was filed without the knowledge of the assessee. No such claim has been made. Even otherwise, for the sake of argument if it is accepted that return of income by the son filed on 30-11-2006 was without the knowledge of the assessee then between 30-11-2006 and 12-5-2008 there must be enumerable occasions when filing of return by the son of the assessee would have been discussed and so also the fact of non-disclosure of investment in FDs and interest income earned thereon. Onus is heavily on the assessee and his son to lay evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing any accountability of any one. Basic structure of tax-system will shake which requires an assessee to declare true and correct income in the return. Therefore, even if return of income is filed by agent, or power of attorney holder or guardian, the assessee has to bear the consequences of an untrue return, unless there are other satisfactory reasons. Our view also is supported by the decision of Hon'ble Karnataka High Court in Master Sunil R.Kalrao (2007) 292 ITR 86 wherein Hon. Court observed "if the view that since the beneficiary himself does not file the return, he would not come within the ambit of the expression "his income" as appearing in section 271(1)(c) of the Act, is accepted, that would result in the representative acting contrary to the statute and getting over the levy of penalty. A reasonable interpretation has to be given with a view to achieve the object of the Act. The object of the Act is to obtain returns with accurate particulars of the purpose of levy of tax." Hon. Madras High Court in G.K. Ravi v. CIT [1999] 235 ITR 208 confirmed the levy of penalty under section 271(1)(c) on the assessee for delay in filing the return by the representative of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and investigation. At that stage the Assessing Officer may have, satisfaction or may not have satisfaction about concealment of income made by the assessee. It is only the assessment order which is crucial in deciding about the satisfaction arrived at by the Assessing Officer. Further, the provisions of section 271(1B) inserted by Finance Act, 2008 with retrospective effect from 1-4-1989 takes care of such anomalies where Assessing Officer does not record satisfaction in clear words but make addition to the total income. But in the present case there are clear and specific recordings of satisfaction about concealment committed by the assessee. Therefore, such arguments have no force and are rejected. III. Another issue raised by the ld. AR is whether return filed by the assessee on 10-6-2008can be said to be revised return? In our considered view the return filed under section 139(5) alone can be said to be a revised return. Since time limit for filing return under section 139(5) had expired on 31-3-08the return filed on 10-6-08cannot be validly called a revised return. Hon. Supreme Court in Kumar Jagdish Chandra Singh v. CIT [1996] 220 ITR 67 has held that returns filed beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imself and, if however, the omission or wrong statement is discovered by the department as a result of enquiry and thereafter a revised return is furnished making amendments, that will not amount to a revised return as contemplated under section 139(5). SLP against this decision filed by the assessee was dismissed by Hon. Supreme Court in A. Sreenivasa Pai v. CIT (SLP C No. 5462 of 2000). (iii) Biland Ram Hargan Dass v. CIT [1988] 171 ITR 390 (All.) wherein revised return was filed after detection of concealed income in the search then surrender of income in the revised return would not be voluntary. There was no bona fide, inadvertence or omission. (iv) CIT v. Mohd. Mohtram Farooqui [2002] 177 CTR 434 (Raj) -Revised return was filed after seizure of cash from the premises of the assessee. Levy of penalty under section 271(1)(c) was held justified as the revised return was not treated as voluntary. (v) K.P. Madhusudan v. CIT [2001] 251 ITR 99 (SC) - A revised return was filed after search and seizure where cash and jewellery and certain documents were seized. It was claimed that there was no concealment and it was for buying peace that additional income has been disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the assessee that he had no accounts notwithstanding the admitted fact that he had incomes in lakhs of rupees was rightly rejected by the Tribunal. In the circumstances, the omissions or wrong statements in the original returns, as admitted by the assessee, could not be stated to be, by any standard of evaluation of evidence or material on record, inadvertent or bona fide omission or mistake. That being so, the revised returns were not really within the correct ambit and scope of section 139(5) of the Act so as to allow immunity to the assessee from the mischief of section 271(1 )(c) of the Act. (viii) Sunanda Ram Deka v. CIT [1994] 210 ITR 988 (Gau) The filing of the revised return after discovery of the omission or wrong statement is not by itself sufficient to bring the revised return within the ambit of sub-section (5) of section 139 of the Income-tax Act, 1961. The further requirement is that this omission or wrong statement in the original return must be due to bona fide inadvertence or mistake on the part of the assessee. Held, that it could be seen that from the original return there had been a staggering difference in the second revised return filed and no particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case of holding that declaration was voluntary but not now after the issue of show cause notice by the Assessing Officer on the basis of definite information. Accordingly, we are of the view that there was a mens rea involved in not declaring the investment and interest income therefrom in the original return filed on 30-11-06. VI. The next issue is whether assessee has disclosed all the material facts in the return filed on 30-11-06? In our considered view No. It is because investment in the bank and interest earned therefrom are important material facts for the purpose of computing income and if assessee does not disclose them in the original return the assessee would be guilty of contumacious conduct on which penalty under section 271(1)(c) is leviable for concealment of income and also for furnishing inaccurate particulars of income. 9. Now we discuss certain authorities referred to by the ld. AR. (i) In CIT v. Nuruddin & Brothers (supra) the assessee had furnished a voluntary disclosure petition under section 271(4A) disclosing therein the peak of cash credits. This disclosure petition was filed after assessment was complete pointing out to the Commissioner that cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (supra)- In this case assessee has agreed to an addition to total income for assessment purposes and there was no independent evidence that assessee has concealed the income. It was held byHon. Court that penalty provisions in Income-tax act is quasi criminal in nature and, therefore, penalty provisions should be strictly construed. There should be clear finding by the competent authority after enquiries that a definite amount has been concealed by the assessee in the return of income. Where assessee admits to addition in order to avoid further litigation then resort to penalty proceedings cannot be taken. This case pertained to Asst. Year 1964-65 and the department did not have in its possession any material except assessee agreeing for addition. The facts in the present case before us and the law applicable to the assessee are quite different and, therefore, this authority is also of no help to the assessee. (v) Gumani Ram Siri Ram v. CIT (supra)- In this case Assessing Officer has found cash deposit in squared up accounts in assessee's books. In the statement given by the assessee such squared up account was surrendered but there was no material on record to show that surre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earning share income therefrom. It cannot be said that he is not active in financial matter and, therefore, he was unable to communicate about the deposits in the bank and interest earned therefrom. Fourthly the assessee did not give any reason why only the bank interest of Rs. 129 was declared and not the major interest earned from undisclosed investment. Finally it is not explained as to why assessee chose to be silent between 30-11-2006 to 31-3-2008 and only woke up when the Assessing Officer issued show cause notice intimating the definite information in his possession. We further find that papers of illness filed by the assessee indicated that he was confined to hospital from 3-3-2006 to 6-3-2006 (4 days). There is no information as to what happened between 7-3-2006 and 30-11-2006 or thereafter till 31-3-2008 and why he could not declare the investment and interest therefrom. It has nowhere been claimed that assessee was out of business. Once he is actively involved in the business in spite of claiming illness then there is no reason to hold that he was unable to file correct return of his income on 30-11-06. Accordingly, we hold that explanation furnished by the assessee is d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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