2009 (8) TMI 69

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....e "Act") by the Finance Act, 2008 with retrospective effect from 1.4.1989, it was observed that it was not necessary for the Assessing Authority to specifically record satisfaction while initiating penalty proceedings under Section 271 of the Act. This question was accordingly answered on 21.7.2009 itself while framing the aforesaid questions. Arguments were heard on question of law No. (a) above and the judgment reserved. Therefore, we proceed to decide that question of law. 3. The relevant facts which are to be taken note of in answering the aforesaid question are recapitulated below. 4. This case relates to the assessment year 1994-95 for which the respondent herein (hereinafter referred to as the assessee) had returned its income at Rs.2,790/-. Before the income could be assessed by the Assessing Officer (AO) on the basis of that return, a report was received by the AO from ADI (Inv.), Unit-V that the agricultural income disclosed by the assessee was bogus. After receiving this information, the AO made extensive inquiries and in the process, statements of various persons was also recorded. Thereafter, the assessee was confronted with the material collected by the AO affor....

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....ment of various persons of that village, were also recorded by the ADI (Inv) u/s 131 of the Act and it transpired that the assessee company did not have any agricultural land in that village. Statement of the proprietor of M/s Shiv Bhandar Naya Bazar, Delhi was also recorded on 8-3-95 in which he categorically stated that he had given a number of entries to the various clients of one Sh. S.K. Jain, CA on commission and M/s. Dass Trading & Holdings (P) Ltd. was one of them. He further stated that he received commission only for issuing sale bills and no agricultural produce was purchased by him from M/s. Dass Trading & Holdings (P) Ltd. A number of opportunities were given by the ADI (inv.) New Delhi to the assessee company by issuing summons u/s 131 on 5-12-94, 9-12-94, 14-12-94, 9-3-95, 22-3-95 and 24-3-95 but neither anybody from the company ever attended the office nor any evidence/ explanation was filed by the assessee company to substantiate its claim of agricultural income. In the light of the above facts, it is crystal clear that the comapny6 had not earned any agricultural income during the FY 1993-94 relevant to the AY 1994-95. Assessee's explanation that the revision o....

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.... that the revised return was filed subsequent to the issue of the questionnaire. But the assessee cannot be discredited by saying that it was cornered by its investigations. The assessee was definitely in a fix, but more so on becoming handicapped by the death of its auditor in a road accident. Not only that the assessee could not lay its hands on the relevant documents, but it felt suffocated by the absence of the auditor, as it was he who had audited the accounts, it was he who must have prepared and furnished the original return and it was he who could have satisfied the assessing authorities on the questions posed by them. Thus, it was the death of Shri S.K. Jain which placed the assessee on a quagmire which prompted the assessee to file a revised return offering the income of Rs.3,82,747/- for taxation. Moreover, it appears that the authorities below were carried away more by the enquiries conducted in the case of Dass Trading. It is true that as in the case of Dass Trading, in this case also the agricultural produce was shown to have been sold to M/s Shiv Bhandar. But there is no categorical finding, nor any specific enquiry made, which can suggest that in the case of the ass....

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....t was the reason for setting aside the penalty orders in AFL Developers (supra), we fail to understand how on the same reasoning case of M/s. Dass Trading, i.e. the present assessee, could be decided. Even going by that order, it is clear that insofar as the present assessee is concerned, inquiries were conducted. Furthermore, the reasons given by AFL Developers for filing return, which was found to be wrong, were the same as given by the present assessee. In these circumstances, wholesome dependence on the orders passed in AFL Developers (supra), without discussing the case of the present assessee and without discussing as to how the orders of the AO or the CIT (A) were wrong, the approach of the Tribunal is clearly erroneous and would not stand judicial scrutiny. 9. For this reason, we heard the counsel for the parties on the facts of this case. 10. We have already noted the reason which prompted the AO to conclude that the assessee had concealed the income and Ms. Prem Lata Bansal hammered the same for justifying the penalty order. 11. Mr. Arun Khosla, learned counsel appearing for the respondent/ assessee, on the other hand, submitted that it was not a case of delibera....

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....har, Tehsil Sikandarbad (UP). The assessee was sent various letters during this inquiry, but he did not respond. Cat was out of box on the culmination of inquiry and report dated 9/16.5.1995. It is only thereafter that the revised return was filed on 8.3.1996 when the assessee had his back to the wall and was exposed of its bogus claim made in the original return. Therefore, the alleged reason given by the assessee that the revised return was filed suo motu and, therefore, there was no concealment, cannot be digested. 13. In CIT v. Sajjan, 178 ITR 643, it was held that concealment of income in the original return would attract penalty even if the assessee submits a revised return before the assessment is completed. Case would have been different had there been an inadvertent omission or error in the original return and the same is corrected by a revised return. However, in the present case, we find that there was a deliberate concealment and/or filing false return stating certain income to be agricultural income, when the assessee had not undertaken any such agricultural activity. The explanation furnished for filing the revised return is not bona fide. 14. Section 271(1)(....