Income Tax Appellate Tribunal - Delhi
Tidewater Marine International Inc. vs Deputy Commissioner Of Income Tax ... on 7 July, 2005
Equivalent citations: (2005)97TTJ(DELHI)139
ORDER
1. Since common issue is involved in all these appeals, the same are being disposed of by common order for the sake of convenience. The only issue arising in these appeals relates to the levy of penalty under Section 271(1)(c) pertaining to asst. yr. 1998-99.
2. Briefly stated, the facts are that assessee was treated an agent in respect of various expatriate employees. In all these cases, the returns were filed on 16th Feb., 2001 except in one case in ITA No. 5232 where the return was filed on 22nd Feb., 2001. The notice under Section 148 had been issued subsequently on 26th Feb., 2001 and the returns filed earlier were regularised by the AO under Section 148. The assessments were completed in all these cases on 28th March, 2001. It is pertinent to note that the assessee had claimed exemption under Section 10(5B) of the IT Act, 1961, and the said claim was accepted which resulted in assessment of lesser income than the declared income. For example, in ITA No. 5185 the declared income was Rs. 9,45,704 but the assessment was completed on the total income of Rs. 7,15,670. Similar is the position in other appeals as the amount of declared income and assessed income is different but in all cases the assessed income is less than the declared income. Despite this fact, the penalties under Section 271(1)(c) were imposed on the ground that the returns were filed after detection. The CIT(A) had confirmed such penalties. Hence, the present appeals have been preferred before the Tribunal.
3. Contention of the learned Counsel for the assessee is that there cannot be any concealment where the entire income has been returned and after allowing exemption under Section 10(5B) of the Act, the assessment has been completed at a lesser income. It was also contended that penalty could be justified only where the provisions of Expln. 3 were attracted. According to him, Expln. 3 applies only where the return is filed after the period prescribed under Section 153(1) and until the expiry of aforesaid period no notice had been issued to him under Section 142 or 148. He drew our attention to the facts of the present case and submitted that assessment year being 1998-99, the assessee could file the return upto 31st March, 2001. Since the assessee had filed the return before that period, the first contention was not satisfied for invoking such Explanation. It was also submitted that notice under Section 148 had been issued after filing of the return and, therefore, the provisions of Expln. 3 could not be invoked. On the other hand, the learned Departmental Representative relied on the orders of lower authorities.
4. Rival submissions of the parties have been considered carefully. As far as the first contention of assessee's counsel is concerned, we are in agreement with such contention inasmuch as there cannot be any concealment where the entire income has been declared by the assessee in the original return. In the present case, it is admittedly clear that the entire income of the assessee was declared and on the contrary, the assessment was framed on a lesser income. Therefore, in our opinion, there was no concealment of income. This issue was also considered by the Tribunal on a Bench in the case of Yashwant B. Chigteri v. Asstt. CIT (2001) 70 TTJ (Pune) 242 : (2000) 75 ITD 377 (Pune) to which one of us (JM) was party. The Bench, after following the judgment of Supreme Court in the case of Brij Mohan v. CIT , judgment of Madras High Court in the case of S. Santhosa Nada v. Addl. ITO (1962) 46 ITR 411 (Mad) and judgment of Karnataka High Court in the case of Addl. CIT v. C.V. Bagalkoti & Sons held that act of concealment is committed at the time when original return is filed and, therefore, where return is filed declaring the entire income, the question of concealment does not arise. The only question which remains to be considered is whether Expln. 3 to Section 271(1)(c) would apply in the present case. Admittedly, the returns were filed within the prescribed period under Section 153(1) i.e., within two years from the end of the assessment year. The second condition is that no notice under Section 142 or 148 should be issued before the expiry of the aforesaid period. In these cases notice under Section 148 was issued on 26th Feb., 2001 i.e., before the aforesaid period but after the date of filing of the return. Where the legislature provides for issuance of notice under Section 148 then it must be a valid notice. Once the return is filed, the assessment proceedings are commenced and, therefore, no valid notice could be issued during the pendency of assessment proceedings as laid down by the Hon'ble Supreme Court in the case of Ghan Shyamdas v. Regional Asstt. CST . Therefore, the alleged notices issued on 26th Feb., 2001 were null and void and non est in the eye of law as the assessees had already filed the returns prior to issuance of such notices. In view of the same it has to be held that the provisions of Expln 3 were not applicable at this stage. It must be mentioned that the learned Departmental Representative has relied on the decision of Special Bench in the case of ITO v. Kunden Silk , for the proposition that penalty can be levied even where the entire income is disclosed in the original return. After going through the said decision, we find that the reliance placed by the learned Departmental Representative is misplaced inasmuch as the income surrendered by the assessee at the time of survey had not been included in the original return. Therefore, on facts that judgment cannot apply to present case, the learned Departmental Representative has also relied on two other decisions reported in 80 ITD 616 (Del) (sic) and CIT v. Gurbachan Lal . These decisions are also on different facts and, therefore, the same cannot be applied to these cases. In view of the above discussion, the order of the CIT(A) cannot be sustained. Consequently, the same is set aside and the penalties sustained by him are hereby deleted.
5. In the result, appeals filed by the assessees are allowed.