2015 (11) TMI 1140 - HC - Income Tax

Court upholds revised tax return as valid under Income Tax Act sections; voluntary surrender considered evidence

The court held that the revised return filed on 30th March 1994 was valid under Sections 139(1)(b), 139(4), and 139(5) of the Income Tax Act, 1961. The ... Addition of amount shown in revised return under the pressure of the department - Whether the return filed on 30th March 1994 is a valid revised return? - whether the surrender made in that return dated 30th March 1994 can be regarded as a piece of evidence? - Held that:- In the present case, the Assessee has failed to discharge the onus of showing even prima facie that he was compelled to make a statement during the search or to file a revised return in the assessment proceedings. The record of the assessment proceedings show that adjournments were granted as and when requested by the Assessee. Apart from the fact that he was represented in the assessment proceedings by a CA or an AR, he also had sufficient time and opportunity to reflect on what had been stated by him during the search proceedings. The Court accordingly rejects the plea that the Assessee did not voluntarily make the statement attributed to him in the course of search or that he was coerced during the assessment proceedings to file the revised return. In the present case, filing of the return by the Assessee on 19th January 1993 was only by way of rectification of the defects pointed out by the AO in the notice issued under Section 139 (9) of the Act. This rectified return was related back to the original date when the return was filed on 31st August 1992. It cannot, therefore, be said that the original return was itself ‘non-est’ as contended by the Assessee. Consequently, filing of the revised return in terms of Section 139 (5) of the Act by the Assessee prior to the completion of the assessment on 31st March 1994 was within the time prescribed. Notice had already been issued in the course of the assessment proceedings to the Assessee under Section 143 (2) and Section 142 (1) of the Act. The revised return filed on 31st March 1994 was a valid return. There was no occasion, for the CIT (A) to consider the plea that the statement attributed to the Assessee, as recorded by the AO in the assessment order, was not in fact made by the Assessee or that documents tendered by the Assessee were not considered by the AO. On the contrary, the order of the CIT (A) showed that in the course of appellate proceeding, a remand report was sought from the AO on the additional grounds urged by the Assessee. The remand report of the AO has been set out in para 7.2 of the CIT (A) order. The AO has subsequently denied the contention of the Assessee that no reasonable opportunity was given to the Assessee or that the assessment was completed in a hurry. There is merit in the contention that the revised return should relate back to the return originally filed, minus the omissions and wrong statements. Even if the revised return replaces the original return, the assessment proceedings leading up to the revised return do not get obliterated. ITAT did not commit any error in relying on the statement made by the Assessee under Section 132 (4) of the Act - Decided in favour of the Revenue Issues Involved:1. Validity of the revised return filed on 30th March 1994.2. Whether the surrender made in the revised return can be regarded as a piece of evidence.3. Reliance on a purported statement made by the Assessee under Section 132(4) when the statement was not available on record.Detailed Analysis:Validity of the Revised Return Filed on 30th March 1994:The court examined the provisions under Sections 139(1)(b), 139(4), and 139(5) of the Income Tax Act, 1961. The original return filed by the Assessee on 31st August 1992 was found defective, and a notice under Section 139(9) was issued. The Assessee rectified the defects by filing a return on 19th January 1993, which related back to the original filing date. Consequently, the revised return filed on 30th March 1994 was within the permissible time frame under Section 139(5). The court rejected the argument that the original return was 'non-est' and held that the revised return was valid.Whether the Surrender Made in the Revised Return Can Be Regarded as a Piece of Evidence:The ITAT noted that the revised return was filed voluntarily by the Assessee based on the surrender of the amount declared in the statement under Section 132(4) during the search. The Assessee failed to substantiate the source of the receipt and offered it as unexplained income. The ITAT rejected the plea that the revised return was filed under coercion, noting that the Assessee had sufficient time and opportunity to reflect on his statements during the search proceedings. The court upheld the ITAT's view that the revised return was valid and the surrender made therein could be regarded as evidence.Reliance on a Purported Statement Made by the Assessee Under Section 132(4):Despite the original statement not being available, the court proceeded on merits, noting that at no stage did the Assessee deny making the statement under Section 132(4). The ITAT observed that the Assessee did not file an affidavit as required under Rule 10 of the ITAT Rules to contradict the AO's record. The court agreed with the ITAT that the Assessee's inconsistent pleas regarding the statement and its retraction did not discharge the onus of proving coercion or compulsion. The court found no reason to doubt the validity of the statement attributed to the Assessee and upheld its use as evidence.Conclusion:The court answered the framed questions as follows:1. The revised return filed on 30th March 1994 was valid.2. The question of whether the surrender in the revised return can be regarded as evidence did not arise due to the validity of the revised return.3. The ITAT did not err in relying on the statement made by the Assessee under Section 132(4).The appeal was dismissed with no order as to costs.