TaxTMI 
TaxTMI 
2006 (1) TMI 157
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....ative figures of three years and from the details Assessing Officer found that GP rate for the year under consideration was at 8.45 per cent as against 11.16 per cent of immediate preceding year. The assessee was asked to explain the steep fall in GP rate along with other information of monthwise purchase and sales. Certain other details were also called for and the case was adjourned to 27-12-1993 on which date the assessee did not furnish the information as called for. Accordingly, the adjournment was granted on 6-1-1994. Thereafter chronology of fixed dates as described at page 2 of the assessment order is as under:- ------------------------------------------------ On 6-1-1994 Monthwise purchase and sales with the date of delivering challans, date of receipt of goods and closing stock inventory with valuations. On ....
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....t assessee had purchased copper scraps as under:- ---------------------------------------------------------- Bill Date Name of Quantity Rate & Value No. the supplier Rs. ---------------------------------------------------------- 43 16-1-1992 Shah Mohanlal 3651 kgs. 112 per kg., Kajodimal 4,09,221 45 25-1-1992 -do- 4119.900 112 per kg.,  ....
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....evised return as the revised return cannot wipe out the default already committed in the original return. In view of these facts penalty under section 271(1)(c) is leviable. A notice under section 274 read with section 271(1)(c) is separately sent." It is on the very addition the penalty under section 271(1)(c) has been levied. In the penalty order it has been mentioned that assessee avoided to furnish the details of purchase and in spite of repeated reminder on each and every date of hearing and after due pursuance the assessee has filed the details of purchases which showed the purchase of copper scraps. The revised return was filed by assessee only because of the reasons that the department had persistently asked to furnish the details in respect of purchases and consumption of copper scraps. Therefore, the revised return filed by the assessee was not voluntary but by the efforts of the department. It is, therefore, the penalty has been levied. Before Assessing Officer the assessee did not furnish any explanation but requested for keeping the penalty proceedings in abeyance which request was declined to be accepted by Assessing Officer and he imposed penalty at the rate of 20....
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.... the Assessing Officer before filing revised return by the assessee. He contended that it has been recorded in the assessment order as well as in the penalty order that after repeated requests by the department the assessee had filed the details of sales and purchases and it was only when Assessing Officer had already detected the concealment the assessee was cornered and thus filed revised return. He contended that the amount of sale of scrap was not a small amount which could escape the attention of the assessee so as to be entered in the books of account. The assessee knowingly and deliberately did not show the sale, consumption or stock of the copper scrap and when it was detected by the department the assessee had filed the revised return. Thus, he contended that the findings of ld. CIT(A) that since there was no intention of concealment with regard to unrecorded sales, the assessee cannot be held liable for penalty are factually wrong. To support his contention he relied on the following decisions:- A. A.M. Shah & Co. v. CIT [1999] 238 ITR 415 (Guj.) to raise the contention that any concealment or inaccuracy in the particulars of income in the return occurring at any st....
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....It was, therefore, on 3-2-1994, the assessee filed revised return declaring therein an additional income of Rs. 8,70,941 being sale amount of copper scraps. Till that date the assessee was not confronted with the query of having omitted entry of any such sale in its books of account. No show-cause notice was issued till that date. In these circumstances it was vehemently pleaded that the action of assessee of filing revised return should be considered voluntary and before detection by the revenue. Having declared the income in the revised return and acceptance of the same, no penalty could have been imposed under section 271(1)(c). To raise such contention, reliance was placed by the ld. Counsel on the following decisions:- A. CIT v. Suresh Chandra Mittal [2001] 251 ITR 9 (SC) to contend that where the assessee surrendered additional income by way of revised return after precise queries by Assessing Officer and once the revised return is regularized by revenue, the explanation of the assessee, that he has declared additional income to buy peace and to avoid litigation could be treated as bona fide belief and penalty therefore, cannot be levied. B. CIT v. Hasmukhlal Gandala....
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.... the assessee had concealed the income in respect of sale of copper scrap as the assessee itself has admitted the addition thereof. Referring to the above decision he pleaded that according to section 58 of the Evidence Act an admitted fact need not at all to be proved. Therefore, he pleaded that ld. CIT(A) has wrongly deleted the penalty. 8. We have carefully considered the rival submissions in the light of material placed before us. As a matter of fact the assessee did not record the sale amount of Rs. 8,70,941 in its books of account which was received by the assessee on account of sale of copper scraps which was purchased by the assessee during the year under consideration. The original return of income was filed by the assessee without considering the sale price of above mentioned copper scrap. During the course of assessment proceedings when details of sales and purchases were required to be furnished by the Assessing Officer the assessee submitted revised return which included the sale price of copper scrap as income. The reason given for filing revised return stated in the note has been inscribed in paragraph 3 of this order. In the note it was mentioned that the copper ....
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.... clear that the two situations are independent and separate. Initially the consequence is provided in the language of Explanation 1 it created what is known as "deeming situation". It would thus be seen that the amount added or disallowed in the above process of computation is deemed to represent the income in respect of which particulars have been concealed. In other words the addition of the amount or otherwise disallowance of the amount in the computation of total income would assume a deemed character of concealment by reason of Explanation 1. Therefore, the statutory requirement of section 271(1)(c) requires satisfaction of the officer as regards concealment gets understood in the light of above deeming situation. From the facts it can be seen that assessee has offered an explanation and, therefore, it has to be examined whether the assessee is able to substantiate the said explanation and whether he is able to prove that such explanation is bona fide that all the facts relating to the same and material to the computation of income were disclosed. Thus in our view the case of assessee will be covered by clause (B) of Explanation 1. The explanation of the assessee before the As....
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.... case of assessee that it declared the additional income to buy peace or to avoid litigation. In the present case the assessee himself admitted that the amount disclosed in the revised return is the income of the assessee. The decision in the case of Hasmukhlal Gandalal has also no bearing to the present case as in that case the question related to valuation of property and both the appellate authorities had concluded that the assessee had no intention to furnish inaccurate particulars. The decision in the case of CIT v. Milex Cable Industries also cannot be applied to the facts of the present case as in the said case there was a mistake in the total which came to the notice of assessee when it was pointed out by Assessing Officer and it was the conclusion of Tribunal that assessee had no intention to conceal the particulars of its income. In the case of K.C. Builders Hon'ble Supreme Court has held that mere omission of an item of receipt does neither amount to concealment nor furnishing of inaccurate particulars of income unless and until there is some evidence to show or circumstances found from which it can be gathered that the omission was attributable to an intention ....
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....ate contumacious conduct, if any, on the part of assessee in not having disclosed a true income in the originally filed return. Blameworthiness attached to assessee with reference to original return cannot be avoided by filing a fresh return after concealment was detected by Assessing Officer. Where revised return is made by assessee on his own volition before concealment was detected in the course of assessment proceedings, conduct of assessee has to be taken note of. Section 139(5) applies only to cases of omission or wrong statement and not to cases of concealment or false statements. Thus section 139(5) has application to limited category of cases, namely, where in the original return there was an omission or any wrong statement. The very word "omission" denotes an omission bona fide. Equally, the words "wrong statement" will not take in "a statement known to be false to the person who made statement". However, the word "discovered" coming in section 139(5) makes it clear that at the time of discovering only a person who has furnished return finds out that an inadvertent omission or an unintended wrong statement had crept in the return filed by him. If a person who filed return....