Concealment penalty on filing revised return after enquiry by Investigation Wing deleted as revised return was within the stipulated period prescribed u/s 139(5)
ABCAUS Case Law Citation:
ABCAUS 3061 (2019) (07) ITAT
Important Case Laws Cited/relied upon by the parties:
CIT Vs. Kulwant Singh’ (2019) 104 Taxmann.com 340
The instant appeal was filed by the assessee against the order of the CIT(A) in confirming the penalty levied by the Assessing Officer (AO) u/s u/s 271(1)(c) of the Income Tax Act, 1961 (the Act).
The assessee filed original return of income claiming exemption on account of Long Term Capital Gains. The assessee was summoned by the Dy. Director of Income Tax (Investigation) in respect of an entry regarding Long Term Capital Gains.
Thereafter the assessee filed a revised return declaring the said income shown in the original return as Long Term Capital Gains, as “income from other sources” and paid the due taxes thereupon.
Thereafter the assessment u/s 143(3) of the Act was carried out in the case of the assessee. During the assessment proceedings, the A.O. observed that the aforesaid surrender of income as “income from other sources” in the revised return, was an “undisclosed income” of the assessee as the assessee in the original return, had claimed the same to be tax exempt.
According to the AO, had the assessee been not summoned by the Investigation Wing, the assessee would not have revised his return to offer for taxation the said amount The AO further observed that though the assessee had surrendered the said income in front of the DDIT (Investigation), but did not submit the return (ITR-V) online to the Central Processing Centre (CPC), Bangaluru but during scrutiny assessment proceedings, the assessee offered the said income for taxation.
The AO held that since the assessee had filed the revised return after commencement of scrutiny assessment proceedings and also did not submit ITR-V online to CPC, Bangaluru, it was a case of concealment of income.
The AO accordingly, initiated the penalty proceedings u/s 271(1)(c) of the Act. In the penalty proceedings, the A.O. held that the assessee had concealed the particulars of income and levied the concealment penalty @ 110% of the tax sought to be evaded.
The assessee preferred an appeal before the CIT(A) but remained unsuccessful.
The Tribunal observed that though the assessee had filed the revised return after an enquiry was initiated by the Investigation Wing of the Income Tax Department about the Long Term Capital Gains declared by the assessee, yet, the revised return filed by the assessee was within the stipulated period prescribed under the Act.
The Tribunal pointed out that as per the provisions of section 139(5) of the Act, there is no bar to file a revised income even during assessment proceedings but before completion of the assessment subject to the condition that the period prescribed for filing the same has not expired.
The Tribunal opined that under these circumstances, the revised return filed by an assessee will be a valid return. The AO under such circumstances neither can, nor is supposed to make further addition into the income of the assessee in respect of income which has already been declared by the assessee in the validly filed revised return. If there is no addition made to the income of the assessee, there will not be any tax sought to be evaded by an assessee. If there is no tax sought to be evaded, no concealment penalty can be computed or levied under the provisions of section 271(1)(c) of the Act.
The Tribunal stated that the provisions of section 271(1)(c) of the Act are penal in nature and they are required to be strictly construed. These cannot be extended by way of liberal interpretation to include the cases, which otherwise, do not fall within the purview and scope of the provisions of section 271(1)(c) of the Act.
In view of the fact that the income had already been declared in the revised return, which was valid and filed within the limitation period prescribed for filing the same, the Tribunal held that the penalty in respect of the aforesaid income declared was not leviable and the same was accordingly ordered to be deleted.