No concealment penalty on return revision made before issue of notice u/s 148 though after initiation of investigation in tax evasion petition filed against the assessee – ITAT
ABCAUS Case Law Citation:
ABCAUS 1215 (2017) (04) ITAT
The appellant assessee company was aggrieved by the order of the Commissioner of Income Tax (Appeals) in confirming the order of the Assessing Officer (AO) imposing penalty u/s 271(1)(c) of the Income tax Act, 1961 (‘the Act’).
Assessment Year : 2006-07
Date/Month of Pronouncement: April, 2017
Brief Facts of the Case:
According to the assessee he filed original return of income and revised it subsequently. Later Information was received by the jurisdictional Assessing Officer from the Investigation Unit stating that the members of his family have deposited huge cash in bank accounts and the same were not shown in their returns of income.
Accordingly, the case of the assessee was reopened u/s 147 of the Act by the AO by issue of the notice u/s 148 on the reason that deposit of Rs. 5 lacs in a bank account had not been declared to Revenue.
It is claimed by the assessee that original return of income was revised whereby the said amount of Rs. 5 lacs was declared in revised return and due taxes and interest were paid to Revenue voluntarily before issuing of notice u/s 148.
However, according to the AO, a tax evasion petition was filed against the assessee and investigations were started against the assessee long before filing revised return which, in any case was much beyond the time prescribed for filing revised return of income as stipulated u/s 139(5).
Subsequently, the penalty for concealment of income u/s 271(1)(c) was levied by the AO on the grounds that after filing of tax evasion petition against the assessee and start of investigations, cornered the assessee forcing him to file so called revised return of income which was beyond time stipulated u/s 139(5).
The penalty was confirmed by CIT(A).
Observations made by the Tribunal:
The Tribunal observed that similar situation had arisen in the case of one of the family members of the assessee wherein also the penalty was levied by Revenue u/s 271(1)(c) which stood confirmed by learned CIT(A). However, the said penalty was deleted by the Tribunal,
In the said case, the following were observed:
That according to the assessee he had relied on the expert advise of his tax consultant who advised him that the said amount received was not taxable being his share in profits and investment in discontinued family business of properties on realization of funds invested in the properties on family separation . The assessee filed so called revised return of income reflecting the cash deposit although the prescribed time limit for filing revised return of income as prescribed u/s 139(5) of the Act had lapsed long back. The said so called revised return of income was also not filed by the assessee with jurisdictional AO but with the other ITO. However, the uncontroverted fact was that the so called revised return of income was admittedly filed prior to issuance of notices u/s 148 by any of the ITO.
That according to the Revenue very few percentage of the cases are selected for scrutiny and had there been no tax evasion petition filed against the assessee , the assessee would not had come forward to file the so called revised return of income. However merely because tax evasion petition is filed against the tax- payer does not mean that the tax-payer has concealed income or furnished in-accurate particulars of income and it could not be said with the certainty that the Revenue will in each of such cases shall proceed against the tax- payer by re-opening the concluded assessment in each and every tax evasion petition filed against the tax-payer.
That the tax-payer can always come forward and explain and account for its sources of income with the return of income. The tax-payer can also come forward with an explanation that certain receipts were not included as income in the return of income filed with the Revenue as the said receipts do not bear the character of income within the four corners of charging provisions of the Act or the receipt had a character of being an exempt income within statutory provisions of the Act of 1961 . There are also possibilities that the tax evasion petitions could be filed to cause vengeance on the taxpayer with a malice to seek revenge and retribution against the taxpayer. The fate of tax evasion petition hinges on the outcome of an enquiry and investigation conducted by the Revenue. The tax-payer may when tax-evasion petition is filed against him also re-visit his financial data for the relevant period and in order to avoid un- necessary and protracted litigation with Revenue come forward to file revised computation of income and pay taxes with applicable interest on some additional disclosure out of caution to avoid litigation. This is a normal and reasonable human conduct which falls within preponderance of human probabilities.
That the assessee had also filed an affidavit explaining the facts and circumstances wherein the said income was not included as income in the return of income originally filed with the Revenue. Revenue could not controvert the contents of the affidavit filed by the assessee to prove that the said affidavit had a false or untrue averments made by the assessee.
That in view facts and circumstances of the case, penalty levied u/s 271(1)(c) of the Act cannot be sustained under the afore-stated circumstances as the assessee had came forward with an explanation which is a reasonable and bonafide explanation complying with the mandate of Section 271(1)(c) of the Act read with explanation 1.
Following the aforesaid decision of the tribunal in the case of family member of the assessee, it was held that the penalty u/s 271(1)(c) imposed by the AO and as confirmed by learned CIT(A) was not sustainable in the eyes of law and was ordered to be deleted.