1984 (12) TMI 142 - AT - Income Tax

Penalty upheld for late revised return filing despite concealment charge; Section 271(1)(c) Income-tax Act

The majority view, supported by the Accountant Member and the Third Member, upheld the imposition of the penalty under Section 271(1)(c) of the Income-tax ... Levy Of Penalty, Revised Return Issues Involved:1. Imposition of concealment penalty under Section 271(1)(c) of the Income-tax Act, 1961.2. Validity and relevance of the revised return filed under Section 139(5) of the Income-tax Act, 1961.3. Assessment of the facts and circumstances surrounding the original and revised returns.Detailed Analysis:1. Imposition of Concealment Penalty under Section 271(1)(c):Judicial Member's View:The Judicial Member held that the penalty was not leviable. He reasoned that since the revised return was accepted by the Tribunal as true and correct, there was no concealment of income. He cited the Madras High Court's decision in CIT v. Ramdas Pharmacy and noted that the revised return was filed after discrepancies were found, but this was not material.Accountant Member's View:The Accountant Member dissented, arguing that the revised return did not satisfy Section 139(5) requirements because it was filed only after a raid and subsequent investigation. He cited the Madras High Court's decision in CIT v. J.K.A. Subramania Chettiar and the Allahabad High Court's decision in Amjad Ali Nazir Ali v. CIT, emphasizing that a revised return cannot cover deliberate omissions or false statements in the original return. He concluded that the concealment was intentional and upheld the penalty.Third Member's View:The Third Member agreed with the Accountant Member, stating that the revised return was filed only after the raid and investigation, indicating deliberate concealment. He referenced the Madras High Court's interpretation that Section 139(5) applies only to unintentional omissions or wrong statements, not to deliberate concealment. The Third Member upheld the penalty imposed by the Commissioner (Appeals).2. Validity and Relevance of the Revised Return under Section 139(5):Judicial Member's View:The Judicial Member found that the revised return satisfied Section 139(5) requirements, as the income disclosed in the revised return was accepted by the Tribunal. He dismissed the argument that the revised return was not voluntarily furnished.Accountant Member's View:The Accountant Member argued that the revised return did not meet Section 139(5) criteria because it was filed after the department's investigation. He emphasized that the revised return cannot supplant the original return for penalty purposes if the original return contained deliberate omissions or false statements.Third Member's View:The Third Member concluded that the revised return did not satisfy Section 139(5) because it was filed only after the department's investigation revealed discrepancies. He stressed that Section 139(5) is intended for rectifying honest omissions or wrong statements, not for covering up deliberate concealment.3. Assessment of Facts and Circumstances Surrounding the Original and Revised Returns:Judicial Member's View:The Judicial Member considered all facts from the original return to the assessment and concluded that the revised return was a genuine correction of an earlier omission. He noted that the Tribunal accepted the revised return, which should negate the concealment charge.Accountant Member's View:The Accountant Member detailed the sequence of events, including the raid, the discovery of discrepancies, and the filing of the revised return. He highlighted that the revised return was a response to the department's findings and not a voluntary correction of an honest mistake.Third Member's View:The Third Member reviewed the facts and circumstances, noting the deliberate nature of the omissions and the timing of the revised return. He concluded that the original return contained deliberate concealment, and the revised return was filed only after the department's investigation, thus justifying the penalty.Conclusion:The majority view, as supported by the Accountant Member and the Third Member, upheld the imposition of the penalty under Section 271(1)(c) of the Income-tax Act, 1961. The revised return did not satisfy Section 139(5) requirements because it was filed after the department's investigation revealed deliberate concealment in the original return. The Judicial Member's view that the revised return negated the concealment charge was not accepted. The penalty imposed by the Commissioner (Appeals) was upheld.