THE COMMISSIONER OF INCOME TAX BATHINDA vs. M/S G S ARORA AND SONS GANDHI MARKET

This order shall dispose of ITA Nos. 256 and 257 of 2003 as the same are against one assessee and arise out of the same order. The facts are being taken from ITA No. 256 of 2003. 2. ITA No. 256 of 2003 has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 30.6.2003 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA No. 175 (ASR)/1997 for the assessment year 1988-89 proposing the following substantial question of law:- “Whether in the facts and circumstances of the case, the Income-tax Appellate Tribunal is justified in law in -2- deleting the penalty on account of that the Assessing Officer has not detected any concealment of income before filing of the revised return ignoring the fact that the Assessing Officer, detected the concealed income vide order under section 143(3) dated 28.12.1989?”

Put shortly, the facts of the case as narrated in the appeal are that the assessee is dealing in sale of Refrigerators, Stabilizers, Gramophone, Records Cassettes, Radio, Fans etc. and filed its return on 5.8.1988 declaring an income of Rs.97,250/-. Order under Section 143 (1) was passed on 14.12.1988 (Annexure P-1). The Income Tax Officer (Survey), Jalandhar vide his letter dated 10.5.1989 intimated that some drafts purchased from the banks had been entered in the books of accounts on the dates subsequent to the dates of purchase when the cash was available with the assessee. During the pendency of the inquiries, the assessee filed second return on 16.6.1989 declaring income at Rs.1,37,260/- adding back the peak cash investment at Rs.40,000/-. The assessment was completed under Section 143 (3) of the Act on 28.12.1989 by the Assessing Officer and the surrender disclosed in the revised return on account of peak cash investment was accepted and treated as income of the assessee from undisclosed sources for which particulars were concealed by the assessee. Accordingly, penalty proceedings under Section 271(1)(c) of the Act were also initiated. The Assessing Officer imposed penalties of Rs.30,000/-. Against the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in -3- short “the CIT (A)], who vide order dated 12.12.1996 deleted the penalty. Against the deletion of penalty, the revenue preferred an appeal before the Tribunal. The Tribunal vide order dated 30.6.2003 upheld the order of the CIT (A) and dismissed the appeal of the revenue. Hence, the present appeal.

We have heard learned counsel for the parties and perused the record with their assistance.

Learned counsel for the revenue submitted that the Tribunal had erroneously deleted the penalty levied under Section 271 (1)(c) of the Act. The revenue had detected the concealment and the filing of the revised return by the assessee was as a consequence of such detection and, therefore, penalty was exigible. The finding to the contrary is legally unsustainable.

Controverting the submission of learned counsel of the revenue, learned counsel for the assessee submitted that notice under Section 148 of the Act was issued in September, 1989 whereas the revised return was filed prior thereto on 16.6.1989 and, therefore, filing of revised return before detection of concealment would not attract penalty for concealment and the Tribunal was right in deleting the penalty.

We have given our thoughtful consideration to the respective submissions of learned counsel for the parties. We express our inability to agree with the learned counsel for the revenue. The Tribunal while deleting the penalty recorded that the assessee admittedly had filed revised return on 16.6.1989 for both the years prior to issuance of notice under Section 148 of the Act, on the basis of which -4- the assessment was completed on 28.12.1989. Notices under Section 148 of the Act were issued after completion of three months and 22 days for the assessment year 1987-88 and three months eight days for 1988-89 after the receipt of report of the ADI. On the basis of the aforesaid conclusion, the Tribunal had drawn an inference that there was no wilful concealment on the part of the assessee or that the Assessing Officer had detected the concealment of income on the basis of which revised returns were filed. The relevant observations recorded by the Tribunal would be advantageous to refer to, which read as under:- “It is true that in the instant case, the assessee filed voluntary return on 16.6.1989 for both the assessment years under consideration on the basis of which the AO completed the assessment on 28.12.1989. It is noticed that the AO had not initiated penalty proceeding while processing the original returns under section 143(1) of the Act. The notices under section 148 were also issued after the completion of three months and 22 days for the assessment year 1987-88 and three months and 8 days for the assessment year 1988-89 from the receipt of the report of the ADI and in the meanwhile, the AO had already made thorough enquiries from the banks regarding the purchase of drafts by the assessee, which clearly shows that at that time when the report of the ADI was received, the AO was not -5- definite as to whether any concealment had taken place or not. We may point out here that the basis for issuance of notices under section 148 was nothing but the disclosure of the income by the assessee on 16.6.1989 by filing voluntary returns for both the years under consideration. In our view, the AO has not brought out any material on record to show that the Department had detected the concealment of income before filing of the revised returns by the assessee. In our view, if the A.O. was making some inquiries that would not ifso facto amount to detection of concealment. In other words, the A.O. has not detected any concealment of income before filing of the revised returns. In that view of the matter, we do not see any infirmity in the findings of the CIT (A).”

The findings recorded by the Tribunal have not been shown to be perverse in any manner. Consequently, deletion of penalty upheld by the Tribunal cannot be faulted.

In view of the above, no substantial question of law arises in these appeals. The appeals are accordingly dismissed. (AJAY KUMAR MITTAL) JUDGE August 30, 2010 (ADARSH KUMAR GOEL) gbs JUDGE -6- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 257 of 2003 Date of Decision: 30.8.2010 Commissioner of Income-Tax, Bathinda ....Appellant. Versus M/s G.S. Arora & Sons ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Savita Saxena, Advocate for the appellant. Mr. Ram Lal Gupta, Advocate for the respondent.