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VALSAN CHIYYABATH,THRISSUR vs DCIT CIRCLE 1(1)& TPS, THRISSUR | BharatTax

VALSAN CHIYYABATH,THRISSUR vs. DCIT CIRCLE 1(1)& TPS, THRISSUR

ITA 28/COCH/2025Status: DisposedITAT Cochin29 May 2025AY 2013-14Bench: SHRI INTURI RAMA RAO (Accountant Member), SHRI PRAKASH CHAND YADAV. (Judicial Member)5 pages

AI SummaryDismissed

Facts

The appellant failed to file a regular return of income under Section 139(1). Subsequently, the AO initiated reassessment proceedings under Section 148 based on information of escaped income, leading the assessee to file a return. Despite the income declared in the Section 148 return being accepted, the AO and CIT(A) levied a penalty under Section 271(1)(c) for concealment of income.

Held

The Tribunal upheld the penalty under Section 271(1)(c), affirming that failure to furnish a return under Section 139(1) is deemed concealment under Explanation 3 to Section 271(1), irrespective of a subsequent return filed in response to a Section 148 notice. The Tribunal concluded that the penalty is automatic for income determined under Section 148 in reassessment proceedings and dismissed the assessee's appeal.

Key Issues

Whether penalty under Section 271(1)(c) is leviable when an assessee fails to file a return under Section 139(1) but subsequently files one in response to a Section 148 notice.

Sections Cited

271(1)(c), 139(1), 148, 147, 144B, 271(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH

Before: SHRI INTURI RAMA RAO, AM & SHRI PRAKASH CHAND YADAV., JM

For Respondent: Smt. Leena Lal, Sr. D.R

Hearing: 26.05.2025Pronounced: 30.05.2025

O R D E R Per: Inturi Rama Rao, AM These appeals filed by the assessee are directed against the different orders of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 14.11.2024 for AY 2013-14 and 27.11.2024 for Assessment Years (AY) 2014-15 to 2016-17 confirming levy of penalty u/s. 271(1)(c) of Income Tax Act, 1961 (hereinafter "the Act").

2.

Since identical issues and facts are involved in these appeals, they are heard together and disposed of by this common order.

4.

Brief facts of the case are that the appellant is an individual, had not filed regular return of income for AY 2013-14 under the provisions of section 139(1) of the Act. The AO formed an opinion that income escaped assessment to tax on the basis of information contained on ITBA portal that the assessee received interest income, commission on brokerage, salary, etc. Accordingly, a notice u/s. 148 of the Act was issued on 24.03. 2021. In response to the notice u/s. 148, return of income was filed on 24.03.2021 declaring income of Rs. 63,06,068/-. Against the said return of income, the assessment was completed by the DCIT, Circle-1(1), Thrissur (hereinafter called "the AO") vide order dated 24.03.2022 u/s. 147 r.w.s. 144B of the Act accepting the returned income. The AO initiated proceedings u/s. 271(1)(c) of the Act by holding that the assessee is guilty of concealing income. Accordingly, a show cause notice was issued to the appellant u/s. 273 r.w.s. 271(1)(c) of the Act. In response to the show notice the appellant submits that the return of income u/s. 139(1) could not be filed due to personal problems and there was no deliberate concealment of income, therefore, no penalty should be levied. Considering the above explanation, the AO proceeded with levy of penalty u/s. 271(1)(c) of the Act placing reliance on the decision of the Hon'ble Supreme Court in the case of

9.

The issue that arises in the present appeal is whether the CIT(A) was correct in law in upholding the levy of penalty u/s. 271(1)(c) of the Act. The undisputed facts of the case are that the appellant had not filed regular return of income under the provisions of section 1391(1) of the Act. The appellant has disclosed income of & 80 to 82/Coch/2025 Valsan Chiyyabath Rs. 63,06,068/-in response to notice u/s. 148 of the Act. The assessment was completed accepting the returned income. The AO also initiated penalty proceedings u/s. 271(1)(c) by recording satisfaction that the appellant had concealed income. In response to the show cause the appellant offered explanation that the appellant could not file the return of income under the provisions of section 139(1) for personal reasons and there is no deliberate intention to avoid tax. The AO rejected this explanation and proceeded with levy of penalty. On appeal before the learned CIT(A), the CIT(A) confirmed the levy of penalty placing reliance on the provisions of Explanation 3 inserted to section 271(1) of the Act and also on the judicial pronouncement the Hon'ble High Courts of Allahabad and Madras (supra). From a mere reading of Explanation 3, it is crystal clear that where the assessee fails to furnish the return of income u/s. 139(1) of the Act, it shall be deemed to have concealed particulars of income for such year notwithstanding the fact that the assessee furnished return of income pursuant to notice u/s. 148 of the Act. Furthermore, as held by the Hon'ble Supreme Court in the case of Malbary (N.A.) and Bros. [1964]51 ITR 295 (SC) that penalty u/s. 271(1)(c) is always leviable with reference to the original return of income and the penalty could also be levied with reference to concealment in original assessment proceedings. This position was reiterated again by the 3 judges judgement in the case of CIT vs. Onkar Saran and Sons [1992] 195 ITR 1. In the light of his & 80 to 82/Coch/2025 Valsan Chiyyabath judgement the penalty is automatic in respect of income determined u/s. 148 of the Act in reassessment proceeding. Therefore, we do not find any infirmity, illegality and perversity in the order passed by the CIT(A). Therefore, the appeal filed by the assessee is dismissed.