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TMI Blog2011 (5) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... s a show-cause notice under the first proviso to section 144(1) of the Act on March 19, 1999. However, since the petitioner did not reply to the said notices, the Assessing Officer finalized the assessment proceedings under section 144 of the Act on March 31, 1999, determining total income of the petitioner at Rs. 2,39,190. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act. Accordingly, a show-cause notice came to be issued to the petitioner under section 274 of the Act read with section 271(1)(c) of the Act on March 31, 1999, which came to be served upon the petitioner. However, the petitioner did not submit any reply to the same, hence, respondent No.1 presumed that the petitioner had accepted the assessment order and had nothing more to say in the penalty proceedings initiated under section 271(1)(c) of the Act and imposed a minimum penalty of Rs. 83,640. Being aggrieved, the petitioner filed a revision petition under section 264 of the Act before respondent No. 2, which came to be rejected, vide the impugned order dated March 7, 2002, on the ground that the petitioner had failed to comply with the show-cause notice as well as the remind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 3 to section 271(1) could have been invoked against the petitioner if until the expiry of the period specified under section 153(1) of the Act, that is, by March 31, 1997, no notice had been issued to the petitioner under section 142(1)(i) or section 148 of the Act. However, in the facts of the present case, as is evident from the order made under section 271(1)(c) of the Act, notice under section 148 was issued to the petitioner on March 10, 1997, that is, before the expiry of the period mentioned in section 153(1) of the Act. In the circumstances, Explanation 3 would not be applicable inasmuch as the condition that no notice should have been issued to such person under section 142(1) or section 148 of the Act within the period prescribed under section 153(1) of the Act, is not fulfilled in the present case. It was submitted that unless a person falls within the purview of Explanation 3 to sub-section (1) of section 271 of the Act, failure to furnish a return would not amount to concealment within the meaning of section 271(1)(c). In the circumstances, the impugned order levying penalty under section 271(1)(c) of the Act on the petitioner for failure to furnish return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 153(1) of the Act, penalty could have been levied on him under section 271(1)(c) of the Act for failure to furnish a return of income. 9. In this regard, it may be germane to refer to section 271 of the Act, as it stood at the relevant time, which in so far as the same is relevant for the purpose of the present petition, reads as under : "271. (1) If the Assessing Officer or the Deputy Commissioner (Appeals) or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person-. . . (b) has failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, or (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,-. . . (ii) in the cases referred to in clause (b), in addition to any tax payable by him, a sum which shall not be less than one thousand rupees but which may extend to twenty-five thousand rupees for each such failure ; (iii) in the cases referred to in clause (c), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account when called upon to do so under section 22(4). That was a case where there was a total failure to submit a return. The Mysore High Court held that for levy of maximum penalty under section 28(1)(b) of the Indian Income-tax Act, 1922, the indispensable condition precedent is that the assessee should have furnished his return. The Madras High Court in the case of S. Santhosa Nadar v. ITO (First Addl.) [1962] 46 ITR 411 (Mad), while dealing with a case where a voluntary return was filed after a period of four years from the close of the assessment year and as such, was not a valid return, held that such a case should be regarded as if no return had been filed at all. The court held that it could not be said in such a case that there had been a concealment of the particulars of income or deliberate furnishing of inaccurate particulars and section 28(1)(c) of the Indian Income-tax Act, 1922, would not be applicable, and that the case would come only within the scope of section 28(1)(a) of the said Act. The Allahabad High Court, in the case of CIT v. U. P. State Handloom Corporation [2009] 310 ITR 54 (All), held that mere failure to file a return of income does not amount to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount to concealment within the meaning of section 271(1)(c) of the Act. The only eventuality under which non-furnishing of return of income amounts to concealment is as provided under Explanation 3 to sub-section (1) of section 271 of the Act. Hence, unless Explanation 3 of section 271(1) of the Act is attracted, there can be no concealment as envisaged under section 271(1)(c) of the Act. In the circumstances, it is required to be examined as to whether the provisions of Explanation 3 to section 271(1) could have been invoked in the present case. For the purpose of invoking the provisions of Explanation 3 to section 271(1) of the Act, the conditions enumerated hereinbefore are required to be satisfied. If any of the said conditions are not satisfied, the provisions of Explanation 3 to section 271(1) of the Act would not be applicable. 14. In the present case, admittedly, the petitioner had not been previously assessed under the provisions of the Act, hence, the first requirement of Explanation 3 is duly satisfied. The petitioner had not filed his return of income within the period specified under sub-section (1) of section 153 of the Act and as such, the second condition is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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