Income Tax Appellate Tribunal - Lucknow
Ramesh Chand Gupta vs Income Tax Officer on 10 March, 2004
Equivalent citations: [2004]270ITR189(LUCK), (2004)85TTJ(LUCK)129
ORDER
Phool Singh, J.M.
1. This appeal of the assessee arises out of the order dt. 21st July, 1998, of the learned CIT(A)-I, Lucknow, by which penalty of Rs. 14,000 imposed by the AO under Section 271(1)(c) of the IT Act, 1961 (hereinafter referred to as the "Act"), was confirmed.
2. The relevant facts are that the assessee was found deriving income from civil construction work and filed return for asst. yr. 1995-96 declaring business income at Rs. 1,26,878 and income from other sources at Rs. 18,525. This return was processed under Section 143(1)(a) of the Act vide order dt. 29th March, 1996. The case was selected for compulsory scrutiny under Section 44AD(5) Of the Act and notice under Section 143(2) dt. 17th Dec., 1996, was issued and it was duly served upon the assessee. It appears that the assessee sought several adjournments and did not produce the books of account and other relevant documents called for by the AO. The case was adjourned several times and lastly it was adjourned for 3rd Jan., 1997, and after that the assessee revised his return of income and declared income of Rs. 1,68,930, and ultimately the assessment was completed under Section 143(3) of the Act on 18th March, 1997, on an income of Rs. 1,60,404 and income from other sources at Rs. 18,525. The AO proceeded to initiate the penalty proceedings under Section 271(1)(c) of the Act and issued notice under Section 271(1)(c) which was served on the assessee on 29th March, 1997. The assessee filed his written reply on 15th April, 1997, and it was submitted that initially the assessee had filed return of income of Rs. 1,35,400 and later on revised his return showing an income of Rs. 1,68,930 after applying the net rate of profit @ 8 per cent as provided under Section 44AD of the Act. The return was accepted as such and assessment had been completed under Section 143(3) of the Act. The assessee had not concealed any particulars of income nor furnished inaccurate particulars of such income as the return filed by the assessee stood accepted. The AO considered the submission and did not find force in the same as he noted that initially the assessee had shown income from contract work at Rs. 1,26,878 on net receipts of Rs. 20,05,058 and, thus, net profit from contract work worked out to be 6.3 per cent. As it was less than 8 per cent, the case was selected for compulsory scrutiny under Section 44AD(5) of the Act and the assessee did not produce the books of account nor furnished any details to support the profit shown by him from contract work. Ultimately, the assessee filed revised return in which profit from contract work was shown at Rs. 1,60,404 applying the net rate of profit of 8 per cent on the contract receipt. The AO was of the opinion that the assessee furnished inaccurate particulars of income in the original return and subsequent return will not come to the rescue of the assessee as the said return is not acceptable. When assessee failed to substantiate his income shown in the original return, assessee has shown the profit from contract work @ 8 per cent in accordance with the provisions of Section 44AD but this was done when the AO has already detected the furnishing of inaccurate particulars as the assessee failed to brought books of account or other documents to support the income shown in the earlier return and he was of the view that it was a case of furnishing inaccurate particulars of income and he imposed a penalty of Rs. 14,000 under Section 271(1)(c) of the Act.
3. The assessee came in appeal and reiterated the same submissions to the effect that assessee had already furnished the return well within the statutory time and thus he cannot be held guilty of furnishing inaccurate particulars of income as the assessment was completed under Section 143(3) on the return filed by the assessee subsequently. This plea of the assessee was considered in detail by the learned CIT(A). He proceeded to examine the first plea of the assessee as to whether the assessee has any right to revise the return which was filed under Section 139(4) of the Act and after referring the decision of the Hon'ble Supreme Court in the case of Kumar Jagdish Chandra Sinha v. CIT (1996) 220 ITR 67 (SC), he concluded that the assessee cannot revise the return when he had filed the return under Section 139(4) of the Act as held by the apex Court. He noted that assessee had originally filed return on 14th March, 1996, and admittedly the same was belated return and the same cannot be revised under Section 139(5) of the Act. He also considered the submission of the assessee to the effect that once assessment had been completed on revised return, then the AO had no ground to conclude that assessee can be penalised for furnishing of inaccurate particulars and the learned CIT(A) was of the view that subsequent revised return has no meaning in the eye of law, and the AO could not have accepted the revised return even if he wished to do so in the light of the decision of the apex Court referred to above.
4. The learned CIT(A) considered the second contention of the assessee that there was no concealment or furnishing of inaccurate particulars as prior to any detection by the AO, the appellant has filed the revised return. The learned CIT(A) was of the view that revised return was non est and the assessee cannot be allowed to take shelter behind this plea. In this connection, the learned CIT(A) referred to the decision of the Hon'ble Allahabad High Court in the case of Bhairav Lal Verma v. Union of India (1998) 230 ITR 855 (All) in which the Hon'ble High Court had discussed the connotation of the term "voluntarily" and had approved their observations in the earlier decision of the Court in the case of Hakam Singh v. CIT (1980) 124 ITR 228 (All), in which it was laid down that IT Act does not define the term "voluntarily" and in case the assessee who was apprehending on account of seizure of books of account and other documents in raid that he was likely to be dealt with under the penal provisions of the Act and files return under such a constraint, it cannot be said that the assessee had filed the return voluntarily. The learned CIT(A) also referred to the decision of the apex Court in the case of Tribovandas Bhimji Zaveri v. Union of India (1993) 204 ITR 368 (SC), which was also discussed by the Hon'ble Allahabad High Court in the case referred to above and concluded that the facts are identical. The assessee had taken a chance that his case would not be picked up for random scrutiny as 98 per cent of the cases were bound to be accepted after being processed under Section 143(1)(a) of the Act but, unfortunately the assessee was caught in the scrutiny which is done in only 2 per cent of the cases. The assessee had sought several adjournments before the AO to produce the books of account and to furnish the details. But, when he realised that he is not going to substantiate the income returned in the original return, he filed the revised return and assessee tried to take shelter under the provisions of Section 44AD. The learned CIT(A) also noted that there are cases of assessees who have filed their returns under Section 44AD by applying the rate of net profit of 8 per cent as prescribed in that section, but an assessee, inspite of the fact that he was not maintaining any books of account nor produced the same along with documents before the AO, tried to wriggle out from the said provisions by filing return by applying the net rate of profit which was far below the rate of net profit of 8 per cent and thus the assessee is not going to be met with any leniency as he failed to come with clean hands. The learned CIT(A) confirmed the order of the AO, who had levied the penalty on the basis of difference of tax on the income shown in the first return and the tax on the income assessed, for which he sought support from the decision in the case of G.C. Agarwal v. CIT (1990) 186 ITR 571 (SC), and, dismissed the appeal against which the assessee is in appeal.
5. Shri Kanchun Kaushal, appearing on behalf of the assessee, had reiterated the same submissions and contended that assessee had not revised the original return as noted by the AO and by the learned CIT(A). The assessee has simply corrected the first return after realising some omissions and he had simply applied the provisions of Section 44AD. It was well within the right of the assessee to file subsequent return even though the earlier return was filed under Section 139(4) of the Act. To substantiate this plea, the learned counsel for the assessee has placed reliance on the decision of the Hon'ble MP High Court in the case of CIT v. Dr. N. Shrivastava (1988) 170 ITR 556 (MP) in which their Lordships have observed that in case the assessee files voluntary return under Section 139(4), he has right to file a subsequent return under that provision subject to limitation. The learned counsel for the assessee further submitted that assessee had filed return on 6th March, 1997, and assessee was having time to revise or to file correct return by 31st March, 1997, the date when assessment was to be completed. The assessee was well within the time and the learned CIT(A) had wrongly rejected this very contention of the assessee which found support from the decision of one High Court and in case one High Court has rendered a decision on a particular point and there is no contrary decision then the same view be followed as laid down by their Lordships of Bombay High Court in the case of CIT v. Godavaridevi Saraf (1978) 113 ITR 589 (Bom). On the basis of this, the learned counsel submitted that the assessee corrected his original return well within the time and well within his right to do so as laid down by the Hon'ble MP High Court in the case referred to above.
6. The other plea of the learned counsel for the assessee is that once the assessment had been completed on returned income as revised by the assessee himself in the subsequent corrected return, there is no concealment or furnishing of inaccurate particulars for which penalty under Section 271(1)(c) can be imposed and appeal should be allowed.
7. As against it, the, learned Departmental Representative placed reliance on the order of the learned CIT(A) and submitted that both the pleas raised by the learned counsel for the assessee had been dealt at length by the learned CIT(A), and he has arrived at the conclusion which is supported by the decision referred to in the order under appeal and both the pleas stand rejected by the learned CIT(A) rightly, and no interference is called for in the order of the learned CIT(A).
8. I have considered the submissions of the learned counsel for the assessee as well as that of the learned Departmental Representative and also gone through the case law.
9. So far as the factual position is concerned, it is not in dispute that assessee has filed return under Section 139(4) of the Act and the same was processed under Section 143(1)(a) of the Act. It is also on record and not challenged by the assessee that the AO issued notice under Section 143(2) calling upon the assessee to produce the books of account and to file relevant bills and vouchers. Several adjournments have been sought by the assessee and after availing the same, assessee filed the subsequent return on 6th March, 1997, before the date prescribed for completion of assessment, i.e., 31st March, 1997. The assessment had been completed at an income of Rs. 1,68,930 as shown by the assessee in which the income from contract business was shown at Rs. 1,60,404 as against Rs. 1,26,878 shown in the earlier original return.
10. The first contention of the assessee is that subsequent return filed on 6th March, 1997, is not a revised return but the assessee has corrected the earlier return. In this connection, I have gone through the definition of the word "revise" and Chambers 20th Century Dictionary, New Edition, had given the meaning to this word "revise" which is as under :
"Revise--to examine and correct : to make a new improved version of : to study a new : to look at again"
If I apply the above to the facts of the case, then admittedly, the assessee had made a new or improved version of the earlier original return by filing the subsequent alleged corrected return but it is to be taken as revised return.
11. Now, comes the second argument of the learned counsel for the assessee as to whether the assessee can file revised return under Section 139(5) of the Act in case the original return is filed under Section 139(4). To substantiate this, the learned counsel for the assessee has placed reliance, on the decision of the Hon'ble MP High Court in the case of Dr. N. Shrivastava (supra), but the learned CIT(A) in his order has referred to the decision of the Hon'ble Supreme Court and their Lordships in that case have discussed the law on the point, and concluded that in case the assessee had filed return voluntarily under Section 139(4), he is not entitled to file revised return. Their Lordships have approved the decision of Hon'ble Delhi High Court in the case of O.P. Malhotra v. CIT (1981) 129 ITR 379 (Del), the decision of Allahabad High Court in the case of Dr. S.B. Bhargava v. CIT (1982) 136 ITR 559 (All) and that of Eapen Joseph v. CIT (1987) 168 ITR 26 (Ker). The decision of Hon'ble Supreme Court is binding on all the Courts and Tribunals working in India and once their Lordships have opined that assessee who files return under Section 139(4) has no power to revise the return, the revised return filed by the assessee on 6th March, 1997, is not est in the eye of law because assessee is not entitled to file the revised return.
12. Now comes the other plea of the assessee that assessment has been completed on the amount shown by the assessee in the so-called revised return. The AO, while completing the assessment, has all powers to take the figures shown by the assessee as his income even though such return showing such income is not valid in the eye of law. The assessment had been completed on such income but the fact remains that the assessee himself has, applied the provisions of Section 44AD of the Act to show the income in the revised return and such income, even if not shown by the assessee, would have been arrived at by the AO by applying the provisions of Section 44AD. The figures shown by the assessee in the revised return are the same which would have been arrived at by AO by applying the provisions of Section 44AD of the Act.
13. It is also to be noted that assessee filed return initially showing the income from contract business at a figure of Rs. 1,26,878 which was subsequently enhanced to Rs. 1,60,404. The facts and circumstances under which the assessee was constrained to enhance the income from civil contract business are significant. When case of the assessee was picked up under scrutiny and assessee was served with the notice under Section 143(2) of the Act and AO called upon the assessee to file the books of account and other related documents, assessee tried to sought adjournments after adjournments, and ultimately, could not produce the books of account or other related documents, and returned the income as per the provisions of Section 44AD. All these facts go to establish that assessee was having no base to work out the income from civil contract business at Rs. 1,26,878 and he has tried to take a chance by showing the income at lower figure than to the figure as per the provisions of Section 44AD. The position would have been different if the assessee had produced the books of account and other related documents and AO would not have relied upon them, but it was the case where books of account have not been submitted while the assessee was to produce the base to arrive at the figure of Rs. 1,26,878 as income from civil contract business. The amount was shown intentionally at lower figure and when the AO insisted upon to produce the books of account and other related documents, the assessee tried to take shelter under Section 44AD of the Act and admittedly, as I held above, the second return was not revised return in the eye of law. The assessee who filed original return at a lower figure without any material to substantiate that lower figure of income from business, the assessee was rightly called guilty of furnishing inaccurate particulars of income and it is a fit case in which penalty was rightly imposed by the AO, and rightly confirmed by the learned CIT(A).
14. On the basis of above, I am of the view that grounds raised by the learned counsel for the assessee have no force and appeal is liable to be dismissed.
15. Appeal is dismissed.