AI Structured Summary
Not yet generated for this judgment
Judgment
P.D. Dinakaran,J.
The above tax case appeals are directed against the order of the Income Tax Appellate Tribunal dated 25.11.2004 made in ITA Nos.1285,
1286, 1287 and 1289/Mds/1997 and the following substantial questions of law have been raised for consideration.
T.C. Nos. 916 to 918 of 2005:
Whether on the facts and circumstances of the case, when a non-taxable amount has been offered for assessment even before issue of notice u/s
148, due to the inability of the assessee to adduce proof, penalty could be levied by the assessing officer without recording any satisfaction and
establishing mens rea that the amount offered is taxable income
Whether the ratio in the judgments of the Supreme Court reported in Sir Shadi Lal Sugar and General Mills Ltd. and Another Vs.
Commissioner of Income Tax, Delhi, and Commissioner of Income Tax Vs. Suresh Chandra Mittal, would apply to this case which is before the
amendment/introduction of Explanation 1 clause (B) to section 271(1)(c)
Whether in the circumstances of the case, when the entirety of the circumstances do not point to reasonable conclusion that disputed amount
represents taxable income and that the assessee had consciously concealed his income or had deliberately furnished inaccurate particulars, penalty
could be imposed
T.C. No. 919 of 2005:
Whether on the facts and circumstances of the case, when a non-taxable amount has been offered for assessment even before issue of notice u/s
148, due to the inability of the assessee to adduce proof, penalty could be levied by the assessing officer without recording any satisfaction and
establishing mens rea that the amount offered is taxable income
Whether in the circumstances of the case, when the entirety of the circumstances do not point to reasonable conclusion that disputed amount
represents taxable income and that the assessee had consciously concealed his income or had deliberately furnished inaccurate particulars, penalty
could be imposed
The assessment years with which we are concerned are 1984-85, 1985-86, 1986-87 and 1988-89. The facts which are relevant for the
purpose of disposal of the tax case appeals are as under:-
2.1. The assessee M.S.Mohamed Marzook, who died on 2.11.2001, got repatriated from Sri Lanka in the year 1975. He married the daughter of
a businessman in Sri Lanka, by name, T.O.M.Mustafa. The said Mustafa came to India in 1979 and died in the year 1982. The assessee later
received some of his father-in-law''s outstandings in Sri Lanka for which he could not adduce proof.
2.2. In the previous years relevant to the assessment years, the assessee filed revised returns before the issue of notice u/s 148 of the Income Tax
Act, 1961 which was accepted by the assessing officer, but the assessing officer levied penalty on the ground that the assessee filed revised returns
only after the search that took place at the premises of the assessee on 21.9.1989.
2.3. The Commissioner of Income Tax (Appeals), on appeal, set aside the penalty, but the Appellate Tribunal confirmed the order of the assessing
officer in the department appeal.
2.4. Against the order of the Appellate Tribunal, the above appeals have been preferred by the wife/legal heir of the deceased assessee, namely,
M.Sulaiha Beevi. The said M.sulaiha Beevi is reported dead and the second appellant has been brought on record as legal representative of the
deceased, M.Sulaiha Beevi.
Heard learned counsel appearing for the appellant. According to the learned counsel for the appellant, the assessee offered the sums as non-
taxable income only with a view to purchase peace and avoid prolonged litigation and the assessing officer has not recorded a finding that the
income so offered by the assessee is a taxable income and as the assessee neither concealed his income, nor furnished inaccurate particulars, the
Appellate Tribunal was not correct in confirming the order of the assessing officer levying penalty.
The points raised in the above questions are,
(i) whether the assessee has deliberately concealed his income or furnished inaccurate particulars; and
(ii) whether the assessee has acted bona fide and honestly filed the revised returns with a view to purchase peace.
It is relevant to mention that in similar circumstances, this Court by judgment dated 1.2.2006 in T.C.No.112 of 2000, etc. batch (M. Sajjanraj
Nahar v. The Commissioner of Income Tax, Coimbatore) has elaborately considered the above points, in the light of decisions of Supreme Court
as well as various High Courts and held that if the assessee, at the time of submitting the original return intended to conceal a part of his income or
deliberately gave false particulars at that time, the mere fact that he subsequently rectified the omission by giving the full particulars would not avoid
the applicability of section 28(1)(c) of the Income Tax Act, 1922.
This Court also held that the provision for penalty would be attracted if there had been a deliberate concealment of particulars in any return, and
when the original return did not disclose considerable portions of the income, there would be deliberate concealment. This Court further held that
Where the omission is deliberate, the results of such deliberate omission cannot be got rid of by merely filing a revised return.
This Court, in the above-said judgment, after referring to the decision of this Court in Sivagaminatha Moopanar and Sons Vs. Commissioner of
Income Tax, Madras, , wherein the decision of the Full Bench of this Court in Arunachalam Chettyar v. Commissioner of Income Tax [1931] 6
ITC 58 and the decision in M. Ayyasami Nadar and Bros., Colombo Vs. Commissioner of Income Tax, Madras, were referred to, held as
follows:
If an assessee, therefore, makes a false return knowing it to be false, the fact that he subsequently discloses the true particulars of income cannot
prevent the application of the section which is intended to punish fraud or contumacy on the part of the assessee. Indeed in such a case it would
not even be open to the assessee to submit a revised return: see Arunachalam Chettyar v. Commissioner of Income Tax [1931] 6 ITC 58. The
point, therefore, is not whether all the particulars were given at the time of the return or at or before the assessment, but whether at any time the
assessee deliberately concealed particulars or gave false particulars. That obviously is a question of fact. In the decision of the question certain tests
are applied to find whether the suppression, etc., was deliberate. Where for example the original return is incorrect, but the assessee voluntarily
submits the correct return before the assessment, the Tribunal would be justified in coming to the conclusion that there was no concealment. This
would be so even if the assessee put forward a false case after giving voluntarily the particulars. But where the disclosure was under circumstances
which make it not a voluntary act of the assessee, there would be a justification for the finding that there was a concealment because there was an
intention to conceal and actual concealment at the beginning, the attempt having been frustrated by other causes. It cannot, therefore, be held that
wherever particulars are given before the actual assessment, there would be no concealment.
...
It follows that, if the assessee, at the time of submitting the original return intended to conceal a part of his income or deliberately gave false
particulars at that time, the mere fact that he subsequently rectified the omission by giving the full particulars would not avoid the applicability of
section 28(1)(c).
Referring the decision of the Gauhati High Court in F.C. Agarwal Vs. Commissioner of Income Tax, , this Court held as under:
...to avoid the penalty proceeding as contemplated u/s 271(1)(c) by reason of submission of revised return, the revised return itself must be within
the correct ambit and scope of sub-section (5) of section 139 of the Act. If it cannot be said that a revised return in fact does come within the
correct ambit and scope of section 139(5), then immunity from section 271(1)(c) cannot be availed of by the assessee.
Following the decision of the Supreme Court in Sir Shadi Lal Sugar and General Mills Ltd. and Another Vs. Commissioner of Income Tax,
Delhi, this Court held that in view of the deletion of the word ""deliberately"" by the Amendment Act, the jurisdiction of the Revenue to initiate
penalty proceedings for the concealment of the income or furnishing inaccurate particulars by the assessee has become more stringent, of course
subject to the procedure prescribed under the Explanation to Section 271(1)(c) of the Act to enable the assessee to submit his explanation in this
regard.
That apart, in T.C.112 of 2000, etc. batch, cited supra, this Court held that the acceptance of revised order itself cannot be a bar for initiating
penalty proceedings u/s 271(1)(c) of the Act against the assessee for concealment of income. In the same judgment, this Court, citing the judgment
of this Court in Commissioner of Income Tax Vs. C. Ananthan Chettiar, , held that the when the assessee had offered no explanation except to
assert that he disclosed the income only to buy peace with the Department and what was disclosed was additional income, the penalty should be
levied with reference to the concealed income, since the reason for not having disclosed the income earlier was not stated.
In the instant case, the assessee filed the revised return only after the search was conducted in the premises of the assessee. The Appellate
Tribunal, on the facts of the case, found that the omission or wrong statement by the assessee in the original return was not due to any bona fide or
inadvertence or mistake on his part, but the revised return was filed only after the search action. Though it is the case of the assessee that with a
view to purchase peace he offered the sums as non-taxable income, the Appellate Tribunal held that there is no material with assessee to show that
the mistake had crept in the original return accidentally without any intention warranting deletion of penalty. On the other hand, the Appellate
Tribunal found that the reasons assigned by the assessing officer to hold that the assessee had concealed the income are genuine and accordingly,
confirmed the penalty.
It is a settled law that once the authorities have arrived at a subjective satisfaction under the facts and circumstances of the case, it may not be
proper for this Court to enter upon the merits of the controversy at all, and unless it is demonstrated that the indication made by the Assessing
Officer to initiate penalty proceedings is mala fide, perverse, based on no evidence, misreading of evidence or which a reasonable man could not
form or that the person concerned was not given due opportunity resulting in prejudice, the said proceedings need no interference.
For the foregoing reasons, we are of the considered opinion that the Appellate Tribunal was justified in confirming the penalty levied by the
assessing officer. We do not see any merit in these appeals. Accordingly, finding no question of law, much less a substantial question of law, all the
appeals stand dismissed. Connected TC.M.Ps. are closed.