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TMI Blog2013 (9) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) in respect of the investment of Rs. 5 lakhs declared in the revised return levied by the Assessing Officer is wholly illegal, unlawful and against the principles of natural justice. 1.2 The learned Commissioner of Income-tax (Appeals) has grievously erred in law and /or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned penalty. 2.1 The learned Commissioner of Income-tax (Appeals) has grievously erred in law and on facts in confirming that the appellant had concealed income in respect of investment of Rs. 5 lakhs made with Kotak Mahendra Life Insurance Ltd. and that the revised return filed by him was not voluntary and as a result of enquiry made by the Additional Director of Income-tax (Investigation), Valsad. 2.2 That in the facts and circumstances of the case as well as in law, the learned Commissioner of Income-tax (Appeals) ought not to have upheld the penalty levied under section 271(1)(c) by the Assessing Officer in respect of investment of Rs. 5 lakhs declared in the revised return. 2.3 The learned Commissioner of Income-tax (Appeals) has failed to appreciate that the revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the Assessing Officer levied penalty under section 271(1)(c) of the Act aggregating to Rs. 1,82,600. Being aggrieved, the assessee carried the matter in appeal before the learned Commissioner of Income-tax (Appeals) but without success and now, the assessee is in further appeal before us. It was submitted by the learned authorised representative that revised return was filed by the assessee in time and the disputed amount has been added by the assessee in the revised return of income filed by him and, therefore, penalty is not justified in the facts of the present case. In the written submission filed by the learned authorised representative, reliance was placed on the judgment of the hon'ble Gujarat High Court rendered in the case of BTX Chemical P. Ltd. v. CIT as reported in [2007] 288 ITR 196 (Guj). Reliance was also placed on another judgment of the hon'ble Gujarat High Court rendered in the case of CIT v. Shankerlal Nebhumal Uttamchandani as reported in [2009] 311 ITR 327 (Guj). As against this, it was submitted by the learned Departmental representative that the revised return of income was filed by the assessee after being cornered by the notice under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanjay V. Deshmukh) Deputy Director of Income-tax (Investigation) Valsad." From the contents of the above notice, we find that in the said notice, the Deputy Director of Income-tax (Investigation) has asked the assessee to produce copies of the return of income filed by the assessee for assessment years 2007-08 and 2008-09 along with all the annexure like the balance-sheet and the profit and loss account, etc., along with list of bank accounts, bank book, cash book for the said period. From this notice, it does not transpire that any material was available with the Deputy Director of Income-tax (Investigation) regarding unaccounted investment made by the assessee. The relevant part of the statement recorded by the Deputy Director of Income-tax (Investigation) on November 24, 2008 being question No. 7 and the reply is reproduced by the Assessing Officer on page 2 of the assessment order in which it is stated by the assessee that after the receipt of notice under section 131, the assessee approached the chartered accountant for guidance and he advised the assessee that the investment in the Kotak Securities is not reflected in the personal balance-sheet and he advised the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h items only which are discovered by the Assessing Officer on the scrutiny of return of income or after carrying out investigation and discovering some more items of income not found declared or mentioned in the return of income. Prior to filing of return of income there is no concept of concealment or furnishing of inaccurate particulars. 8. The initial phrase used in section 271(1)(c) suggests that the Assessing Officer has to find in the course of any proceedings under this Act . . . that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. In fact the proceedings against the assessee would start only after return of income is filed by the assessee or after issuance of statutory notice against him such as under section 142(1) or under section 143(2). Carrying out survey under section 133A is not at all any proceedings. Proceedings as used in section 271(1)(c) are statutory proceedings initiated against the assessee either by issuance of statutory notice or after filing of return of income. Survey under section 133A or search under section 132 or issuance of notice under section 133(6), for example, are only means of colle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 133A is an action for calling of information, in itself it is not a proceeding. 9. Further clause (c) to section 271(1) mentions as concealed or furnished'. They are past-tense words indicating that the assessee has committed certain act on which penalty is leviable. Thus the act of concealment or furnishing of inaccurate particulars should be viewed by the Assessing Officer as done with respect to return of income. The omission or commission or contumacious conduct has to be viewed from the return of income and if certain thing is not disclosed or not furnished therein only then it can be said that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. Prior to this assessee has not done any contumacious conduct on which penalty can be levied. Merely because certain receipts are not recorded in the books of account or receipts are not issued to the patients, but income therefrom was finally declared in the return of income, then there is no contumacious conduct. For not maintaining books of account or not issuing receipts to the patients for the amount received by the assessee, the books, at the best, can be rejected by invokin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of penalty was valid.' Similar view has been taken in the following judgments also : (i) CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC) ; (ii) CIT v. Badri Prasad Kashi Prasad [1993] 200 ITR 206 (All) ; (iii) Prabhat Oil Traders v. ITO (No. 3) [1996] 218 ITR (AT) 39 (Ahd) ; (iv) City Dry Fish Co. v. CIT [1999] 238 ITR 63 (AP) ; (v) CIT v. Mohd. Bux Sokat Ali [2004] 265 ITR 326 (Raj) ; and (vi) Asst. CIT v. VIP Industries Ltd. [2009] 122 TTJ (Mum) 289 ; [2009] 30 SOT 254 (Mum). 10. Our view that no penalty is leviable if impugned amount is disclosed in the return of income is supported by the decision of the hon'ble Allahabad High Court in the case of Smt. Govinda Devi v. CIT [2008] 304 ITR 340 (All). In that case the assessee received lottery prize money in January, 1992 and disclosed the same in the return filed for the assessment year 1992-93 and paid the taxes. The assessing authority passed an ex parte assessment order and ex parte penalty order in the assessment year 1991-92. It was held by the hon'ble court that once prize money has been disclosed in the return of income for the assessment year 1992-93 and also taxes were paid then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly requires the assessee to furnish copies of the return of income filed by the assessee for the assessment years 2007-08 and 2008-09 along with all the annexures thereto like the balance-sheet, the profit and loss account, etc., and the assessee was also asked to produce list of bank account, bank book, cash book, etc., for the said period. Hence, in the said notice issued by the Deputy Director of Income-tax (Investigation) under section 131 of the Income-tax Act, 1961 on November 20, 2008, there is no indication regarding any adverse material having brought out on record by the Department regarding any concealment of income by the assessee. The assessee's explanation is this that this investment was made out of past savings but on receipt of this notice under section 131 of the Income-tax Act, 1961, the assessee consulted a chartered accountant who advised the assessee to file revised return of income and include additional income in the same to cover this investment since he was not in a position to substantiate his explanation that the investment was made out of past savings. It is not the case of the Assessing Officer that the revised return of income was not filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of this advertisement/instruction and, therefore, this judgment is not applicable in the present case. The second decision cited by the learned Departmental representative is the judgment of the hon'ble Kerala High Court rendered in the case of CIT v. Haji P. Mohammed as reported in [1981] 132 ITR 623 (Ker). The facts of that case are that the assessee, individual, was a contractor executing works for PWD and for the assessment year 1971-72, he filed return of income declaring total income of Rs. 21,240 under the head "Income from business" being the 10 percent of the aggregate amount of Rs. 2,12,388 said to have been received by him from the Department. On the basis of information in his possession, the Income-tax Officer on December 10, 1971 enquired about the amount received by him from irrigation department and not included in the return. Thereafter, the assessee submitted the revised return on December 27, 1971 declaring an income of Rs. 33,020 worked out by addition of Rs. 1,17,796 to Rs. 2,12,388 and applying 10 percent as the profit rate to the total. Under these facts, the penalty was imposed by the Assessing Officer which was deleted by the Appellate Assistant Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of the Income-tax Act, 1961 along with questionnaire calling for certain details. In that case, clear finding is given by the Tribunal that much before the revised return filed by the assessee, the questionnaire had been issued by the Assessing Officer calling for certain details and the assessee filed revised return only thereafter and hence, it was held by the Tribunal that the revised return has not been filed voluntarily in a bona fide manner. In the present case, the notice under section 131 of the Income-tax Act, 1961 was issued by the Deputy Director of Income-tax (Investigation) on November 20, 2008 and in the said notice also, the assessee was asked to furnish copies of return of income filed for the assessment years 2007-08 and 2008-09 along with all annexures like the balance-sheet and the profit and loss account and the assessee was asked to furnish list of bank accounts, bank book and cash book, etc. and hence, it is seen that no specific questionnaire was issued by the Deputy Director of Income-tax (Investigation) and revised return of income was filed by the assessee immediately on November 24, 2008 and it is explained that the assessee had explained regarding the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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