No Concealment if return revised due to search of other person when assessee voluntarily filed revised ITR and no proceedings were initiated u/s 153 against him-ITAT
ABCAUS Case Law Citation:
1052 (2016) (11) ITAT
Important Case considered:
Ravi Sud vs. ACIT (2015) 39 ITR (T) 356
CIT vs. SSA’S Emerald Meadows (2016)
Brief Facts of the Case:
The assessee was an individual engaged in the business of manufacturing of art silk grey cloth. He filed the original return of income declaring total income at Rs. 96,887/-. Thereafter assessee voluntarily filed revised return of income showing total income at Rs.11,69,390/-. The additionally declared income voluntarily offered was on account of interest on fixed deposits, investments and personal expenses.
However, the revised return was treated as invalid as the same was filed after the expiry of statutory time limit for filing revised return. Thereafter a notice u/s 148 of the Income Tax Act, 1961 was issued and assessment was completed after making an addition of Rs.50,000/- towards unexplained cash credits. Penalty proceedings were also initiated u/s 271(1)(c).
Quantum appeal against the addition was dismissed by the first appellate authority (CIT-A) which was further confirmed by the ITAT.
Subsequently penalty order was passed imposing penalty u/s 271(1)(c) on account of concealment of income on the additional income offered in revised return + addition of Rs.50,000/- u/s 68.
Aggrieved, the assessee went in appeal against the penalty order before CIT(A) who deleted the penalty u/s 271(1)(c) on the addition of Rs. 50,000/- but sustained the penalty on the additional income offered in the revised return.
The assessee was in appeal before the Tribunal against the order of the CIT(A).
Contentions of the Appellant assessee:
The assessee submitted that the allegation of Assessing Officer (AO) that additional income was offered due to detection during the course of search proceedings u/s 132 was baseless as no proceedings under section 153C had ever been initiated in the case of assessee. The assessee relied on the decision of the ITAT Mumbai in the case of Ravi Sud.
The assessee also contended that the show cause notice issued by the AO u/s 274 was bad in law as he did not specify as to whether the proceedings had been initiated for concealment of income or furnishing of inaccurate particulars of income. The assessee relied on the judgment of the Hon’ble Karnataka High Court which had been further upheld by Hon’ble Supreme Court by dismissing the SLP filed by the Revenue.
Contentions of the Revenue:
The Revenue contended that the additional income was offered by the assessee only because the same was detected in the course of search carried out in the case of some other assessee. Also revised return was filed beyond the statutory time limit.
Observations made by the Tribunal:
The ITAT observed that in the case of Rajiv Sud, the Mumbai ITAT under similar set of facts had held that when the assessee had suo motu offered the additional income and the same was not detected during any course of action by the Revenue authorities against the assessee. Under such circumstances, it could not be said to be a case where any concealment of income was detected against the assessee inviting penalty action under section 271(l)(c).
It was noted that in the present case, the assessee had submitted for treating the revised return filed as return filed in compliance of notice u/s 148 However, no proceedings were initiated u/s 153 against the assessee. Therefore the re-assessment proceedings were carried out just to validate the revised return and there was no detection of concealed income by the Assessing Authority and in such circumstances no penalty u/s 271(1)(c) of the Act was leviable.
The appeal of the assessee was allowed and the penalty order was quashed.