MS. MEETA GUTGUTIA,NEW DELHI vs. ACIT, NEW DELHI

PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER

2.1 Since no return of income for the assessment year under consideration u/s 139(1) or 139(4) of the I.T. Act, 1961 was filed by the appellant, the income declared and assessed at Rs.51,53,610/- in the return of income filed in response to notice u/s 148 was treated by the Assessing Officer as concealed income and accordingly penalty proceedings u/s 271(1)(c) were initiated for concealment of income.

“5. In the case of the assessee, she had taxable income for A.Y. 2008-09 for which she was liable to furnish her return of income before the due date of the relevant year or at the most before the expiry of one year from the end of the relevant Assessment Year i.e. only upto 31/03/2010. Whereas, the assessee has filed her return of Income on 16.12.2010 i.e. only after issue of notice u/s 148 of the I.T. Act, on 29.09.2010. The intention of the assessee to conceal her particulars of income proves from the fact, that when she was having taxable income for the year under consideration as himself has admitted in her reply filed on 31.01.2012, that the accounts were got audited for the year under consideration, why not the return of Income was filed on or before the due date and why not the tax on the said income was deposited. The assessee has come forward only after issue of notice u/s 148 of the Act on 29.09.2010 and has deposited the self assessment tax of Rs.16,15,240/- on 16.12.2010 for the taxable income shown in the return of income filed in response to notice u/s 148. Therefore, it is only in pursuance of the department, that the assessee has disclosed her taxable income for the A.Y. 2008-09 and has paid the taxes.”

5.1 The Ld. AR submitted that Income returned in response to notice u/s 148 of Rs. 51,53,610/- was accepted & assessed as it filed i.e. without any addition . He further submitted that the accounts were duly audited u/s 44AB and tax audit report was obtained within due date i.e. on 28-Aug-2008 and the AO had accepted the ITR u/s 147 as per books audited u/s 44AB of the Income Tax Act, 1961. It was submitted that the TDS deducted by the parties was duly reflected in Form 26AS of the appellant and there was no information available with the Department as to any concealment having been made by the assessee. It was urged by the Ld. AR that the assessee is regularly assessed u/s 143(3) with Central Circle-19 (Erstwhile CC- 10) for previous AY’s and the Return u/s 139(1) not filed for the year could not be filed due to the following reasons :

(a) Due to financial paucity balance tax due could not be paid by the due date, and (b) Prior to amendment in section 139(9) inserted by the Finance Act 2013, w.e.f. 1-6-2013, any return filed without 4 payment of tax due was invalid.

5.2 The Ld. AR emphasized that it is neither a case of concealment of income nor furnishing of inaccurate particulars of income u/s 271 (1)(c ) of the Act . It was urged that penalty proceedings u/s 271(1)(c) were not legally sustainable. He drew our attention to a chart showing the relevant dates as under:

AY-2008-09 Event Date

Time Limit u/s 153(1) 31-12-2010 Concerned AY 2008-09 ending 31-03-2009 Date of Notice u/s 148 29-09-2010 Date of Filing ROI 16-12-2010 5.3 The Ld. AR submitted that from a conjoint reading of the provisions of section 153(1) as well as the factual matrix of significant dates it was clear that not only did the assessment proceedings start before the expiry of due date u/s 153(1) but return was also submitted in compliance thereof before the expiry of the prescribed time limit u/s 153(1). The Ld. AR also submitted that Hon’ble Delhi High Court in the case of CIT vs. SAS Pharmaceuticals 335 ITR 259 (Del) in Para 15 and 16 has held that concealment of particulars of income or furnishing of inaccurate particular of income by the assessee has to be in the income-tax return filed by it. Section 271(1)(c) of the Act has to be construed strictly. He submitted that unless it is found that there is actually a concealment or non-disclosure of the particulars of income, penalty cannot be imposed. The Ld. AR emphasized that there is no such concealment or non- disclosure as the assessee had made a complete disclosure in the income-tax return and offered the entire income for the purposes of tax. He submitted that the returned income was accepted by the AO and no addition was made and hence the penalty u/s 271(1)(c ) was not imposable. He also submitted that the assessee’s case is squarely covered by the findings of the ITAT Bangalore Bench in the case of Muninaga Reddy vs. ACIT ITA 1488/Bang/2012 for the preposition that when an income which is ultimately brought to tax is declared in a return of income, there can be no question of treating the Assessee as having “concealed particulars of income or furnished inaccurate particulars of income. He submitted that the starting point of determining concealment for imposing penalty is the return of income. If the return of income declares income which is ultimately brought to tax there can be no complaint by the revenue that the Assessee is guilty of concealing particulars of income or furnishing inaccurate particulars of income. He submitted that in light of the facts of the case and the settled judicial pronouncements the penalty ought to be deleted.

5.4 The Ld. DR relied on the order of the Ld. CIT (A) and submitted that the penalty evaded ought to be sustained.

The penalty was permissible under the law on the date on which the offence of concealment of income was committed, that is to say, on the date of the offending return. Hon’ble Madras High Court in the case of CIT v. K.R. Chinni Krishna Chetty [2000] 246 ITR 121 has held that under section 271(1)(c) of the Act the authority is given the discretion to levy a penalty if there is concealment of particulars of income and even as regards the quantum of the penalty there is a discretion. Of greater importance is the necessity for a definite finding that there is concealment, as without such a finding of concealment, there can be no question of imposing any penalty. In the assessee’s case, the AO has not given any finding in assessment order that the assessee had concealed any income or furnished inaccurate particulars of such income. He had simply accepted the returned income u/s 148. Hence assessee’s case is covered by the decisions referred to above and penalty u/s 271(1)(c) will not be imposable. In CIT v. Suresh Chandra Mittal [2001] 251 ITR 963 (SC) the assessee filed revised returns showing higher income after search and notice for reopening of assessment, to purchase peace and avoid litigation and Department simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith, High Court was justified in holding that no penalty could be levied. The assessee’s case is on more strong footing as that of Suresh Chand Mittal (supra) decided by Hon’ble Supreme Court. As held in earlier paragraphs there should be variation in assessed and returned income and such variation should be as a result of concealment. It is not the case of assessing officer that penalty u/s 271(1)(c) has been imposed on certain additions made to the returned income. Hon’ble Delhi High Court in the case of M/S S.A.S. Pharmaceuticals (supra) while deciding the issue levy of penalty u/s 271(1)(c) in paragraph 15 has held as under:

“15. It necessarily follows that concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee has to be in the income tax return filed by it. There is sufficient indication of this Court in the judgment in the case of Commissioner of Income Tax, Delhi-I Vs Mohan Das Hassa Nand 141 ITR 203 and in Reliance Petro products Pvt. Ltd (supra), the Supreme court has clinched this aspect, viz., the assessee can furnish the particulars of income in his return and everything would depend upon the income tax return filed by the assessee.”

Order pronounced in the Open Court on 31st of March, 2016.