Gujarat High Court
Commissioner Of Income Tax vs Girish Devchand on 18 March, 2013
Author: Akil Kureshi
Bench: Akil Kureshi
COMMISSIONER OF INCOME TAX....Appellant(s)V/SGIRISH DEVCHAND RAJANI....Opponent(s) O/TAXAP/32/2013 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 32 of 2013 ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus GIRISH DEVCHAND RAJANI....Opponent(s) ================================================================ Appearance: MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date : 18/03/2013 ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI) Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') dated August 03, 2012. The following questions have been presented for our consideration :
(a) Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal is right in deleting the penalty levied by the Assessing officer levied by the u/s.271(1)(c) of the Act amounting to Rs.1261050/- ?
(b) Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal has failed to appreciate the fact that the assessee filed revised return only after the case was selected for scrutiny and after issue of a questionnaire and as such, the additional income disclosed by the assessee in revised return was not voluntary ?
Issue pertains to penalty of Rs.12.61 lac (rounded off) imposed by the Assessing Officer, which came to be deleted by the Commissioner of Appeals and which order came to be upheld by the Tribunal.
Briefly stated the facts are that the assessee for the assessment year 2005-06 had filed his original return of income declaring total income of Rs.5.96 lac (rounded off). During the course of assessment under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), the assessee filed revised return and declared further income of Rs.37 lac. Upon completion of the assessment proceedings, the Assessing Officer initiated penalty proceedings for such additional income of Rs.37 lac disclosed by the assessee in the revised return. The Assessing Officer holding that the assessee had furnished inaccurate particulars of his income to the tune of Rs.37 lac imposed penalty at the rate of 100% of the tax sought to be avoided under Section 271(1)(c) of the Act and quantified the same at Rs.12.61 lac.
Assessee carried the penalty order in appeal. CIT (Appeals) deleted the penalty making following observations :
7.
In the instant case, on perusal of facts, I find that the appellant had filed his original return of income on 31.10.2005 declaring total taxable income of Rs.5,96,580 and also filed revised return of income on 01.02.2007 declaring total taxable income of Rs.42,96,580/-. The revised return filed by the appellant was within the time limit prescribed u/s.139(5) of the Act. I am of the view that liability to penalty u/s.271(1)(c) and filing of revised return u/s.139(5) are mutually exclusive. If a case falls within the scope of section 139(5), there would be no chance for levy of penalty u/s. 271(1)(c) on the basis of original return. This view has been confirmed by Madras High court in case of CIT v. J.K.A. Subramania Chettiar (110 ITR 602). The similar view has been taken by P & H High Court in case of CIT v. Gururam Das Fruit and Vegetable Agency (254 ITR 361) wherein it was held that where the assessee has filed revised return disclosing his entire income and paid taxes thereon before the issuance of notice u/s.148, no penalty u/s.271(1)(c) is leviable. The jurisdictional high court in case of CIT Vs. Shankerlal Nebhmal Uttamchandani 311 ITR 327 (Guj.) has held that revised return filed before the detection of concealment, in such case no penalty is leviable. Respectfully following above decision & in view of the above discussion, the penalty levied by the AO of Rs.12,61,050/- is hereby ordered to be cancelled.
The Revenue carried such order of CIT (Appeals) before the Tribunal. The Tribunal by the impugned judgment rejected Revenue's appeal. The Tribunal made the following observations :
6. Having heard the ld.D.R., we have carefully gone through the orders of authorities below. The assessee before the AO has submitted that to buy peace as assessee was disturbed after death of his brother and to avoid any protracted litigation with the department he opted filing revised return of income on 1st February, 2007 by offering further income of Rs.37,00,000/- over and above income offered in the original return of income. This covers loan taken by him from various persons of Rs.19,00,000/- as well as further amount to cover error of omission and commission and other discrepancy if any. The reason given for filing revised return was that most of the business was looked after by his brother who was in a position to comply with the details and since he was no more in this world, he opted to file revised return. Looking to these facts, we convinced that ld.CIT(A) is legally and factually correct in canceling the penalty of Rs.12,61,050/- levied by AO u/s.271(1)(c) of the I.T. Act, 1961. Consequently, we decline to interfere.
Having heard the learned counsel for the Revenue, having perused the orders on record, we see no reason to interfere. The Tribunal had come to the conclusion that the assessee to buy peace and being disturbed by the death of his brother, to avoid protracted litigation filed the revised return and disclosed additional income. Such additional disclosure of Rs.37 lac included loans taken from various persons totalling to Rs.19 lac and to cover error of omission and commission, if any. Reason for filing revised return was shown to be that the business was substantially looked after by the brother, who would have been in a position to comply with the details. In his absence, such details would not be easily available and it was, therefore, that the assessee opted to file the revised return. In our view, the Tribunal having appreciated the relevant facts in its proper perspective and having considered the various decisions, committed no error in deleting the penalty.
We additionally notice that this Court in the case of Commissioner of Income-Tax v. Shankerlal Nebhumal Uttamchandani, reported in 311 ITR 327, had held that when during the course of assessment proceedings, there was detection of undisclosed income before filing of the revised return, the Tribunal correctly deleted the penalty. This Court made the following observations in this regard :
11.
As noted hereinbefore, the Tribunal has in terms found that though certain queries were raised and put to the assessee there was no specific pin pointing of particular items of income which have been concealed by the assessee. The Tribunal has found, as a matter of fact, that till 31.3.1989 the process of detection was not complete, the date 31.3.1989 being the date of filing of revised returns. In face of these findings recorded on the basis of evidence appreciated by the Tribunal, the Court does not find it necessary to deal with any other issues considering the question referred for the opinion of this Court. In fact, there is no material on record to indicate that the aforesaid finding of the Tribunal is incorrect in any manner whatsoever. Furthermore, the Tribunal has also noted as a matter of fact that the very same amounts standing to the credit of the bank accounts of various family members had already been assessed by the departmental authorities along with interest in the hands of the family members and it was also an admitted position that those family members have nowhere admitted that the family members were benamidars of the assessee.
In the present case also, it is not the case of the Revenue that the assessee filed revised return since some of the details of inaccurate particulars of the income were detected by the Assessing Officer during the course of assessment. In our opinion, the Tribunal therefore committed no error.
We may, however, clarify that we should not be seen to have approved the observation of the CIT (Appeals) to the effect that once the revised return was filed within the time limit prescribed under Section 139(5) of the Act, there could be no penalty because the liability to penalty and filing of the revised return are mutually exclusive and that if the case falls within the scope of Section 139(5) of the Act, there would be no chance of levying penalty under Section 271(1)(c) of the Act on the basis of the original return. We may examine such a question in future when such a situation presents before us.
In view of above observations, the Tax Appeal is dismissed.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) Aakar Page 6 of 6