AI Drafter 
TaxTMI 
TaxTMI 
2019 (12) TMI 746
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....d. The Coordinate Bench of the Tribunal has observed that if the income declared in the revised return which is valid and filed within the limitation period prescribed for filing the same, the penalty in respect of such declared income under the provisions of section 271 (1)(c) of the Act is not leviable. The Ld. counsel for the assessee has submitted that the assessee is related to 'Shri Gajjan singh Thind' and the facts and circumstances and even the dates of events, such as, date of filing of return of income, issuances of notice, filing of the revised return of income etc., are exactly identical except the quantum of income declared and the penalty imposed. The Ld. counsel for the assessee has submitted a chart showing the sequence of events, which is reproduced as under:- Return of Income filed on declaring income at Rs. 90,36,860/- 31.07.2014 Notice u/s 143(2) issued by ITO Ward 7(1)Ludhiana 18.09.2015 Summons issued by ADIT (inv.) for appearing on 08.10.2015 30.9.2015 Revised by adding Rs. 19.55,227/- on account of profit on sale of shares and filed on Inadvertently omitted to submit ITR-V to CPC, Bangluru 08.10.2015 Notice u/s 142(1) alongwith que....
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.... 26.05.2016 Order u/s 143(3) passed on 20.06.2016 After adding a sum of Rs. 2,00,020/- on Account purchase price of shares) assessed at Rs. 1,41,92,330/- 5. The assessee has also placed a copy of the ITR-V alongwith computerized acknowledgement of receipt of ITR-V from CPC, Bangaluru to show that the assessee had e-filed the revised return on 8.10.2015. The Ld.Counsel for the asssessee has further invited our attention to the provisions of section 139(5) of the Act, as applicable in the assessment year under consideration, which read as under: "139(5) If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier." 6. The Ld.Counsel for the asssessee, therefore, has submitted that as per the relevant provisions of section 139(5) of the Act, an assessee is entitled to file a revised return within the stipulated period as prescrib....
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....ly filed revised return. If there is no addition made to the income of the assessee, there will not be any tax sought to be evaded by an assessee. If there is no tax sought to be evaded, no penalty can be computed or levied under the provisions of section 271(1)(c) of the Act. The reliance in this respect can be placed on the decision of the Coordinate Bench of the Tribunal in the case of ' CIT Vs. Kulwant Singh' (2019) 104 Taxmann.com 340 (Chandigarh - Trib.), wherein the following observations have been made by the Coordinate Chandigarh Bench of the Tribunal: "15. Before proceedings further, we deem it fit to first discuss the relevant provisions of section 271(1)(c) of the Act as they stood during the relevant period / assessment year under consideration. "271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- ....... (c) has concealed the particulars of his income or furnished inaccurate particulars of [such income, or] ...... he may direct that such person shall pay by way of penalty,- ..... [(iii) i....
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....rticulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, means the tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income; (b) in any case to which Explanation 3 applies, means the tax on the total income assessed [as reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice under section 148; (c) in any other case, means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished." 16. A perusal of the above referred to section 271(1)(c) of the Act reveals that there are two parts of this section. The first part speaks about the charge which may invite penalty i.e. a person has concealed 'particulars' of his income or furnished inaccurate particulars of income, he may be directe....
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....ect of reducing the loss declared or converting that loss into income by the act or omission of the concerned person for concealment of income or furnishing of inaccurate particulars of income. Then as per the clause (b) of Explanation 4, wherein, in a case to which Explanation 3 applies i.e. where the concerned person fails to file within the stipulated period a return of income despite having taxable income, in that case, the tax sought to be evaded will be the tax on the total income assessed but reduced by the amount of advance tax, tax deducted at source, tax collected at source and self-assessment tax paid before the issue of notice u/s 148 of the Act. As per the above said provision what is material is the evasion of the tax and in that scenario, if a person does not file a return and, hence, does not disclose his particulars of income and meaning thereby concealed his particulars of income but if he before the issuance of notice for the reopening of the assessment u/s 148 of the Act, had deposited due taxes and the resultant addition after assessment does not create any liability to pay any further tax, there will be no tax sought to be evaded. 19. Now com....
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....ct, 1975. The relevant part of Circular No. 204 dated 24.7.1976 giving explanatory note on the aforesaid inserted provisions reads as under:- "61.11 New Explanation 4 defines 'the amount of tax sought to be evaded'. According to the definition, this expression will ordinarily mean the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed. In a case, however, where on setting off the concealed income against any loss incurred by the assessee under other head of income or brought forward from earlier years, the total income is reduced to a figure lower than the concealed income or even to a minus figure, 'the tax sought to be evaded' will mean the tax chargeable on the concealed income as if it were the total income. Another exception to the general definition of the expression 'tax sought to be evaded' given earlier is a case to which Explanation 3 applies. Here, the tax sought to be evaded will be the tax chargeable on the entire total income assessed." 21. Even in the Explanation 1, what is relevant is any fa....
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....e purpose of provisions of section 115BBE substituted by Taxation Law (2nd Amendment) Act, 2016 w.e.f. 1.4.2017 and section 271AAC of the Act w.e.f. 1.4.2017. In our view, the above contention of the Ld. DR is not tenable. The relevant section 115 BBE and section 271AAC for the sake of convenience are reproduced as under;- 115BBE. (1) Where the total income of an assessee,- (a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of- (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). (2) Notwithstanding anything contai....
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....2018 w.e.f. 1-4-2017" 24. It is pertinent to mention here that prior to 1.4.2013, there was no section 115BBE. Section 115 BBE was inserted vide Finance Act 2012 to tax the income referred to in section 68, 69, 69A, 69 B, 69 C or 69D at a flat rate of 30%. Prior to 1.4.2013, any unexplained income of the assessee either offered by himself or detected by the Assessing officer are to be taxed as per the normal rate as prescribed from time to; time. However, during the period of demonetarization in the year 2017, it was noticed that the assessees had started taking benefit of the provisions of sections 68, 69, 69A and started depositing their unaccounted for / undisclosed income in the bank account declaring the same as their income of the assessment year under consideration in the return of income and paying taxes @ 30% as provided u/s 115BBC of the Act, act of the assessee was taken as contributory factor in failure of the Voluntary Disclosure Scheme. Hence, to curb this practice, the government substituted sub section (1) of section 115 BBE to provide that wherein in the return of income furnished by the assessee, the total income of an assessee includes an income referred....
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....tax and declaring the same under the aforesaid sections in the return of income yet, the Government still has not come with the penalty provisions in respect of such voluntarily declared income in the return of income, rather has chosen to enhance the tax rate form 30% to 60%. The penalty u/s 271AAC of the Act is leviable only if such an income is not declared in the return of income. In view of our above discussion of the matter, since in these cases the assesse have decaled the income in question in the return of income itself, the tax at the maximum rate slab duly paid thereupon, the returned income accepted as such without any addition on this issue, hence, there was amount of tax sought to be evaded, hence, it cannot be said to be a fit case for levy of penalty u/s 271(1)(c) of the Act. 26. Even otherwise, a perusal of clause (iii) to section 271(1) reveals that as per the relevant provisions, the Assessing officer may direct a person who as per clause (c) has concealed the particulars of income or furnished inaccurate particulars of such income to pay by way of penalty, a sum which shall not be less than but which shall not exceed three times, the amount of tax sough....