Penalty 2711c Immunity Explanation5A for Belated Return u/s 139(4). Immunity available to assessee who has filed belated return of income u/s 139(4)-held by ITAT Ahmedabad.

Penalty 2711c Immunity Explanation5A for Belated Return u/s 139(4). Immunity available to assessee who has filed belated return of income u/s 139(4)-held by ITAT Ahmedabad.

Case Law Details:
IT(SS)A.No.24/RJT/2013
Hitesh Mulchand Doshi (Appellant) vs. ACIT (Respondent)
Date of Order/Judgment: 16/05/2016

Important Judgments Cited:
ITO Vs. Gope M. Rochlani, 49 taxmann.com 46 (Mum.)ITA No.7737/2011(Mum.)
CIT v/s Rajesh Kumar Jalan, [2006] 286 ITR 276 (Gau.) Gujarat High Court
CIT v/s M/s. Jagriti Aggarwal, [2011] 339 ITR 610 (P&H) Punjab & Sind High Court
Commissioner of Income Tax v. Rajesh Kumar Jalan (2006) 286 ITR 274 Gauhati High Court
Fathima Bai v. ITO, ITA No.435 of 2004 Karnataka High Court 

Brief Facts of the Case:
A search operation was carried out at the premises of the assessee under section 132 of the Income Tax Act, 1961 on 15.9.2010. Later a notice u/s 153A was issued on 10.6.2010. In response to the notice, the assessee filed his return of income on 31.8.2010 The AO accepted the income returned and passed the assessment order u/s 153A. Subsequently, the AO has initiated penalty proceedings under section 271(1)(c). on the ground that as per Explanation 5A to section 271(1)(c), the income declared by the assessee in response to the notice under section 153A of the Act is to be deemed as concealed income. Ultimately, the AO imposed the penalty equivalent to tax sought to be evaded by the assessee on the returned income.

Aggrieved by the order, the assessee appealed to the CIT(A) but did not get relief. The assessee approached to ITAT which is the subject matter of the present case.

Contention of the Assessee:
The assessee contended that he is covered within the immunity provided from imposition of penalty in clause (b) of the Explanation 5A to section 271(1)(c). According to him, he had filed return within the due date as provided under section 139(4)and paid taxes.

Revenue’s Contentions
The Revenue contended that  a belated return of income filed u/s 139(4) could not be considered as having been filed within the “due date” which is a conditions for immunity as per clause (b) of said Explanation 5A.

The ITAT noted that The ITAT, Mumbai Bench in ITO Vs. Gope M. Rochlani (supra)  had observed that even the return of income filed belatedly within the extended period available under section 139(4) would also be considered as falling in the due date period and relying on the said judgment of ITAT Mumbai, it held that the assessee was entitled for the immunity.

In the said case of ITO Vs. Gope M. Rochlani the Mumbai  ITAT had observed that wherever the legislature had specified the “due date” or has specified any date for a specific compliance, the same has been categorically specified in the Income Tax Act, 1961. For example, regarding tax audit u/s 44AB, the specified date has been specifically mentioned as the date provided in section 139(1). Similarly, in section 43B related to deduction on cash basis also, the “due date” has been specifically provided as the date mentioned in subsection (1) of section 139. In contrast to the above said sections, the ITAT noted that in Explanation 5A, the legislature had not categorically specified the due date as provided in section 139(1) but has merely envisaged the words “due date”.According to ITAT the use of words “due date” can be very well inferred as due date of the filing of return of income filed under section 139, which includes section 139(4).

Similarly ITAT had noted that wherever the legislature has provided the disadvantages /consequences of filing of the return of income belatedly under section 139(4), then the same has also been specifically provided. For example; section 139(3) which bars the carry forward of losses for returns filed belatedly u/s 139(4). Thus, the meaning of the words “due date”, sans any limitation or restriction as given in clause (b) of Explanation 5A, cannot be read as “due date” as provided in section 139(1). The words “due date” therefore, can also mean date of filing of the return of income under section 139(4).

ITAT Mumbai had also observed that this issue had been explained by the various High Courts also in the context of sections 54F and 54(2) that the due date of section 139 can be inferred as due date under section 139(4) also.