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TMI Blog2017 (10) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... ot paid the self assessment tax under section 140A, while filing the return of income, but revises the income, by filing revised return of income, and pays the tax on the revised return of income at the time of filing the revised return of income? 2. The above question arises in this backdrop. The assessee before us is a public company which had filed its return of income on 30th September 2008 declaring a taxable income of Rs. 44,69,33,790. The total tax due, as per this return of income, was Rs. 16,84,01,690 which included income tax of Rs. 15,19,12,796 and interest thereon amounting to Rs. 1,64,88,896. It was declared by the assessee that the tax deducted at source was Rs. 26,91,930 and the remaining amount of tax liability, i.e. Rs. 16,84,01,690 has been paid as self- assessment tax under section 140A. This claim was, however, found to be incorrect. Accordingly, the Assessing Officer, informed the assessee, vide letter dated 28th April 2009, that "you have shown payment of self-assessment tax Rs. 16,57,09,760 on 28.9.2008" but "the payment of Rs. 16,57,09.760 (as claimed by you) is not being reflected in the income tax department software". The assessee was thus "requested to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 140A of the Act cannot be invoked for imposing penalty under section 140A of the Act for non-payment of tax or interest on the income declared in the return. Therefore, we are of the considered view that in such circumstances, the penalty under section 140A(3) of the Act cannot be levied. .... 3. The Division Bench had reservations on correctness of this approach, and the Division Bench was thus of the view that this aspect of the matter needs to be reconsidered by a larger bench. Accepting this recommendation, Hon'ble President has constituted this special bench. That is how we have come be in seisin of the matter. Preliminary issue: 4. Shri Soparkar begins by pointing out that what is before the Special Bench is only one of the aspects of the matter and a decision on this aspect, by itself, cannot decide the matter as to whether or not the penalty under section 221(1) can be sustained on the facts of this case. He submits that in the present case, the first question whether, given the fact that the assessee had subsequently filed a revised return and duly paid self-assessment taxes thereon, the provisions of section 221(1) can at all be invoked in respect of non-pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, on merits, and desist from initiating the process of enlarging the scope of adjudication before this special bench. It is only on this question that the views of a bench of three members are relevant, since the views expressed by one division bench, on this aspect of the matter, did not find concurrence by another division bench. There is no point in enlarging the scope of issue before the special bench and extending it to areas on which there are no differences in the approach of the division benches. In any case, all other issues relating to the imposition of impugned penalty, as may be necessary for adjudication, will be considered by the division bench giving effect to this order. We, therefore, reject the submissions of the learned counsel for the assessee, and proceed to deal with the question referred to the special bench. Submissions by the assessee: 6. Coming to the facts of this case, learned senior counsel for the assessee takes us through the sequence of events with a view to, as he submits, demonstrate that the revision of income tax return was bonafide. 7. It is pointed out that the original income tax return, as filed by the assessee on 30th September 2008, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original returns cannot be adverted to for that purpose". Learned counsel also points out that, in holding so, Hon'ble Punjab & Haryana High Court has followed the judgment of Hon'ble Allahabad High Court in the case of Niranjan Lal Ram Chandra vs. CIT [(1982) 134 ITR 352 (All)], wherein it was observed that "once a revised return has been filed under s. 139(5), the original return is substituted by the revised return as a result of the amendments made in the original return by the revised return" and that "consequently, the IT authorities could not take into consideration the original returns for the assessment of the assessee". Learned senior counsel then points out that the views so expressed in Beco Engineering's case (supra) have been confirmed by Hon'ble Supreme Court in the case of CIT vs Mahendra Mills [(2000) 243 ITR 56 (SC)]. Learned counsel then refers to the judgment of Hon'ble Bombay High Court, in the case of CIT vs Shri Someshwar Sahkari Sakar Kharana Ltd [(1989) 177 ITR 443 (Bom)] wherein, according to the learned counsel, it was held that once a valid revised return is filed, it cannot be open to the Assessing Officer to even look at the original income tax return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible, the view in favour of the assessee should be adopted. In support of this proposition, he relies upon oft quoted decision of Hon'ble Supreme Court, in the case of CIT vs Vegetable Products Ltd [(1973) 88 ITR 192 (SC)]. We are thus urged to concur with the views expressed by the Tribunal in the case of Shiv Shakti Credits (supra), as it is, at the minimum, a reasonable and possible view of the matter and is in favour of the assessee. Stand of the revenue: 11. Shri Jagdish, learned Commissioner (DR), vehemently opposes the submissions of the assessee. He beings by pointing out that, on facts, assessee has behaved in a very irresponsible manner and resorted to outright falsehoods. He points out that, as evident from the original income tax return- a copy of which is filed before us at page 1 of the paper-book, the assessee claims to have paid Rs. 16,67,09,760 but no such payment was actually made. Learned Departmental Representative that this misstatement was detected when the discrepancy in claim of tax payment of Rs. 16,67 crores vis-à-vis the actual tax payment figures in income tax department's software was reported. Until the time the assessee was confronted w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention is then invited to Hon'ble Delhi High Court's judgment in the case of Vinod Kumar Khatri Vs DCIT [(2016) 129 DTR 377 (Del)] wherein it is observed that "there is merit in the contention that the revised return should relate back to the return originally filed, minus the omissions and the wrong statements" and that "even if the revised return replaces the original return, the assessment proceedings leading upto the revised return donot get obliterated". On the strength of these submissions, learned Departmental Representative urges us to hold that merely because the assessee has subsequently filed a revised return, and paid due admitted tax liability thereon, earlier lapse of the assessee in not making payment of admitted tax liability does not come to an end. Rejoinder: 12. In his brief rejoinder, learned counsel for the assessee submits that we must bear in mind the fact that the impugned penalty is not for misreporting the facts or for making incorrect statements, but for non payment of admitted tax liability at the time of filing income tax return. It is, therefore, not even relevant whether the assesse made any wrong statement about payment of admitted tax liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 139 or section 142 or section 148 or section 153A or, as the case may be, section 158BC, after taking into account the amount of tax, if any, already paid under any provision of this Act, the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest. 221. (1) Penalty payable when tax in default When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of section 220, be liable, by way of penalty, to pay such amount as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears : Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard: Provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the claims made in the original income tax return vis-à-vis the revised returns of income and the question before Hon'ble Courts above was as to which set of claims, made in the original return or made in revised returns, should be considered by the Assessing Officer. There is an unanimity in all these decisions that the claims made in revised return alone could be considered by the Assessing Officer but neither we have any quarrel with this proposition nor is that aspect at all relevant in deciding the issue before us. The claims made in an income tax return is one thing and all the actions connected with the original income tax return becoming a legal nullity quite another thing. The basic character and traits of these two set of things are materially different, and just because revised return substitutes the original income tax return for the purposes of adjudication on claims made in the income tax return does not mean that revised income tax return also substitutes original income tax return for all legal purposes, including penal consequences in respect of defaults committed in respect of the original income tax return. That will be a wholly superfluous approach, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances and myriad developments. Realism dictates that a judgment has to be read, subject to the facts directly presented for consideration and not affecting the matters which may lurk in the dark". 18. It is, therefore, indeed duty of every subordinate judicial forum to apply the ruling of the superior Courts in such a manner so as to enforce the true legal principles emerging from the same, by putting the words and expression used in the ruling in the right perspective and by taking a holistic legal view of the matter. Such an exercise is not to be viewed as diluting the law laid down in a ruling, but as a cerebral judicial exercise and a call of duty in judicial offices. We have highest respects for the rulings by the higher judicial forums, but it would indeed be inappropriate to use the words and expressions employed in these ruling, in isolation, as complete exposition of law and as a blind man's walking stick, rather than luminosity of judicial knowledge with the benefit of which we have to perform our duties of office. Let us, in the light of our this understanding about the manner in which observations made by the Hon'ble Courts above are to be construed by the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing original income tax return on 30.9.2008 and subsequent revision of income tax return with due payment of admitted tax liability, for the detailed reasons set out above, does not obliterate the default at the time of filing original return of income. The payment of admitted tax liability, while filing revised return of income under section 139(5), does not affect the lapse committed at the time of filing the original return of income, even though claims made in such original income tax return stand supplanted by the claims made in the revised income tax return. Our conclusions: 20. In view of the above discussions, as also bearing in mind entirety of the case, in our considered view, the assessee is, in principle, covered by the scope of the penalty under section 221(1) of the Act in a case in which the though the assessee has not paid the admitted tax liability under section 140A, while filing the original return of income, the assessee subsequently pays the tax on the revised return of income, at the time of filing the revised return of income. We, therefore, answer the question referred to the special bench in affirmative and against the assessee. However, whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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