9911796707
TMI Blog1984 (7) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice of the ITO that the assessee had also received income from share of profit from the firm Hukam Chand Swarn Singh which he had failed to declare in his individual return. He, therefore, issued notice under section 148 of the Act dated 15-2-1977 which was served upon the assessee on 2-3-1977. While acknowledging the receipt of the notice under section 148 the assessee mentioned on the notice itself that return filed on 23-2-1977 may be treated as a compliance to this notice. It would, thus, appear that after issue of the notice under section 148 on 15-2-1977 and before its service on 2-3-1977, the assessee filed a second return of his total income on 23-2-1977 which the assessee wanted to be treated as a return in response to notice under section 148. The ITO on the basis of the above return made reassessment of the total income of the assessee including therein the share income from the firm at Rs. 26,928 as determined in the case of the firm. The ITO also initiated penalty proceedings under section 271(1)(c) and imposed penalty of Rs. 24,047 which is 100 per cent of the amount concealed. The submission before him was that the share income of the assessee in the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed revised return on 23-2-1978 suo motu before being detected by the department. It was contended that even though the ITO had issued notice under section 148 on 15-2-1977 but it was not served upon the assessee till 2-3-1977. The supplementary return was filed voluntarily on 23-2-1977 after the firm in which the assessee was a partner had filed its return on 18-1-1977. It was, therefore, urged that the omission on the part of the assessee to include the share income in the original return filed being unintentional and its voluntary disclosure thereafter on 23-2-1977, before any service of notice on the assessee on 2-3-1977, no penalty under section 271(1)(c) was exigible. The sum and substance of the submissions by Shri Gupta is that the omission was inadvertent and when it came to his notice he filed the supplementary return voluntarily without being detected by the department. 4. Shri D.S. Gupta then raised certain legal issues about the jurisdiction of the ITO in levying the penalty. He pointed out that original return in this case was filed on 25-9-1975 and, therefore, the machinery to levy the penalty was as it stood on 25-9-1975. He pointed out that at that time it was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, urged that the penalty order was liable to be cancelled. 7. Shri R.K. Bali, the learned senior departmental representative, on the other hand, pointed out that the omission of share income from the firm in the return of the assessee was deliberate and not unintentional. In support of his contention he pointed out that on the supplementary return filed by the assessee on 23-2-1977 the verification has been signed on 16-2-1976, i.e., even before the completion of the first assessment on 28-2-1976. He urged that this return was available with the assessee even during the course of original assessment proceedings but he did not care to file the same. According to him, he was sitting on the fence that in case the ITO could detect the same during the original assessment proceedings, the return will be filed and in case it did not come to his notice, the return will not be filed. He submitted that he succeeded in the second design, i.e., the ITO did not detect the same during the course of original proceedings and, therefore, the assessee did not file the same even though the share income was in his knowledge. He also pointed out that the explanation by the assessee that he cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return filed on 23-2-1977 may be treated as a return in response to notice under section 148 was a valid return. He also pointed out that the assessee has filed a letter addressed to the ITO in response to notice under section 148 wherein in paragraph 4 he has mentioned as under : "1. That the notice under section 148 was received by me on 2-3-1977. 2. That I filed revised return on 23-2-1977 declaring my share from Hukam Chand Swarn Singh, Nangal. 3. 4. That the return filed may kindly be considered as voluntary and may also be treated as compliance to your notice under section 148. Sd/--- (Swarn Singh)" Shri Bali pointed out that by this letter the assessee had regularised the return and, therefore, it was a valid return and assessment was also valid. He, therefore, contended that there was no merit in the submissions made on behalf of the assessee. 12. We have very carefully considered the rival submissions. We shall deal with the various points raised by Shri D.S. Gupta and Shri R.K. Bali in the following paragraphs. 13. The first point made out by the learned counsel for the assessee is that the omission to show the share income in the original return wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to the assessment order passed by the ITO reveals that he initiated penalty proceedings under section 271(1)(c). Section 271(1)(c) consists of two limbs : (i) concealing the particulars of income, or (ii) furnishing inaccurate particulars of such income. In the show-cause notice issued by the ITO under section 274(2), the ITO has mentioned both, i.e., concealment of particulars of income or furnishing of inaccurate particulars of income. This is a standardised printed notice by the department. The ITO did not strike out the inapplicable alternative. The learned counsel for the assessee is making capital out of this omission on the part of the ITO in not striking out the inapplicable alternative. The point to be considered, therefore, is whether such a technical error on the part of the ITO will vitiate his jurisdiction. In the assessment order through which penalty proceedings were initiated there are no alternatives mentioned by the ITO. Reference has been made to section 271(1)(c). It is only in the notice that he has not struck out one of the alternatives. The assessee has acted upon this notice and has fully understood as to what exactly the ITO wanted the assessee to explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subsequent letter that the return filed on 23-2-1977 may be treated as a return in compliance with notice under section 148 but did not make the return as valid. He submitted that the assessee even by consent could not confer jurisdiction on the ITO. He pointed out that on every return of income a verification is to be made which is to be signed by the assessee. This verification has to be made on the date when the return has been signed. The date of verification of the return continues to be 16-2-1976 and, therefore, this was not a valid return. On the other hand, the submission by Shri Bali was that the date of verification was substituted by the endorsement on the notice of the return by the assessee as well as a subsequent letter filed by the assessee. This issue has far-reaching effect. In a large number of cases in the Income-tax Department, the practice followed is that the assessees would allure the department to treat such returns voluntarily filed as returns in response to statutory notices under section 148. Not only this, the department also acts on such returns. At the same time the date of verification on the return remains the one which was prior to the issue of no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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