High Court Of Punjab & Haryana
CIT vs. Ved Prakash
Sections 260A, 271(1)(c)
Asst. Year 1988-89
N.K. Sud & J.S. Narang, JJ.
IT Appeal No. 140 of 2003 & CM No. 1473 of 2003
9th February, 2004
Counsel Appeared
Dr. N.L. Sharda, for the Appellant
JUDGMENT
N.K. sud, J. :
CM No. 1473—CII of 2003 This application has been filed for condonation of delay in refiling the appeal.
2. C.M. is allowed. Delay in refiling the appeal is condoned. IT Appeal No. 140 of 2003
3. The Revenue has filed this appeal under s. 260A of the Income-tax Act, 1961 (for short “the Act”), against the order of the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short “the Tribunal”), dt. 30th Jan., 2003, dismissing its appeal, against the order of the Commissioner of Income-tax (Appeals) [for short “the CIT(A)”], cancelling the penalty levied under s. 271(1)(c) of the Act.
4. The facts which are relevant for resolving the controversy and are not in dispute are that the assessee filed his return of income for the assessment year 1988-89 on 10th Nov., 1988, showing an income of Rs. 16,420. On the basis of that return, the assessment was completed under s. 143 (1) of the Act on 18th Jan., 1989. Thereafter, on investigations conducted by the Asstt. Director of Income-tax (Investigation), Bathinda (for short “the ADIT”), it was found that the assessee had purchased the following drafts but the same were reflected in the books of account on subsequent dates : Date of purchase Amount of draft(Rs.) Date of entry in the books of account 4-4-1987 70,566 6-4-1987 11-3-1988 1,00,000 16-3-1988 12-3-1988 85,769 22-3-1988
5. While the proceedings before the ADIT were on, the assessee furnished another return on 7th March, 1991, suo motu at an income of Rs. 2,02,190 by including the peak investment of Rs. 1,85,769 in the bank drafts to the originally returned income of Rs. 16,420. Assessment on this return was also made under s. 143(1) of the Act on 11th March, 1991.
6. Subsequently, the ADIT forwarded his report to the AO, Muktsar, who on the basis of the said report, issued notice under s. 148 of the Act on 28th Jan., 1992. In response to the said notice, the assessee filed another return on 4th Feb., 1993, declaring an income of Rs. 2,02,190 which was the income declared by him in the earlier return filed on 7th March, 1991. This return was filed under protest as the assessee claimed that no income had escaped assessment. The assessee’s objection was overruled and assessment on the basis of this return was made under s. 143(3) of the Act on 7th March, 1994, at the income of Rs. 2,02,190 which was the income disclosed in the return. While completing the assessment, the AO also initiated penalty proceedings under s. 271(1) (c) of the Act for concealment of income. On receipt of a show-cause notice, the assessee contended that no penalty was leviable as he had voluntarily disclosed the undisclosed income in the revised return on 7th March, 1991, much before the AO had issued any notice to him. It was further explained that the issuance of notice under s. 148 of the Act on 28th Jan., 1992, was itself invalid as no income had escaped assessment on that date. The assessee’s explanation was, however, rejected and the AO levied a penalty of Rs. 1 lakh under s. 271(1)(c) of the Act vide order dt. 27th June, 1994. Aggrieved by the said order, the assessee preferred an appeal before the CIT(A) which was allowed vide order dt. 11th Nov., 1996. The CIT(A) observed that the assessee had voluntarily filed the return on 7th March, 1991, on the basis of which the AO had completed the assessment on 11th March, 1991, at an income of Rs. 2,02,190. He also noticed that in response to the notice under s. 148 of the Act, the assessee had filed the return on 4th Feb., 1993, under protest declaring his income at the same figure of Rs. 2,02,190 and the AO had again framed the assessment at the same figure on 7th March, 1994. Accordingly, the CIT(A) was of the view that since there was no variance of income in both the situations, i.e., vide assessment order dt. 11th March, 1991, and assessment order dt. 7th March, 1994, there was no scope for levy of penalty in pursuance of the assessment order dt. 7th March, 1994. The CIT(A), accordingly, cancelled the penalty. The Revenue preferred an appeal before the Tribunal which has been dismissed vide the impugned order in the following terms : “4. We have heard both the parties at length and have also gone through the orders of the authorities below. At the very outset, we may point out the order of the learned CIT(A) is based on correct appreciation of facts and law, and, therefore, no interference is called for. It is an admitted position that the assessee filed a voluntary return on 7th March, 1991, on the basis of which the AO completed the assessment and the assessee paid tax thereon as determined by the AO. It is further clear that the AO had not initiated penalty proceedings while processing the return under s. 143(1) of the IT Act, 1961. It is true that in response to the notice under s. 148 the assessee had filed the return on 4th Feb., 1993, declaring income on the same figure of Rs. 2,02,190 and the AO framed the assessment at the same figure under s. 143(3) of the Act.
We are fully in agreement with this observation of the learned CIT(A) that notice under s. 148 was issued after a span of 9 months and 28 days from the receipt of the report of the ADIT and, in the meanwhile, the AO had already made thorough inquiries from the banks regarding the purchase of drafts by the assessee. It seems that at the time when the report of the ADIT was received the AO was not definite whether any concealment had taken place or not. It is also seen that the basis for issue of notice under s. 148 was nothing but the disclosure of income by the assessee on 7th March, 1991, by filing a voluntary return. In fact, the AO detected nothing before filing of the return in response to notice under s. 148 of the IT Act. The net result of the above discussion is that the order of the learned CIT(A) requires no interference at our level and accordingly we uphold the same.” A bare perusal of the findings recorded by the CIT(A) and the Tribunal shows that the entire undisclosed income in respect of which penalty has been imposed had been disclosed in the return filed by the assessee voluntarily on 7th March, 1991. Assessment on the basis of this return was framed under s. 143(1) of the Act on 11th March, 1991. No penalty proceedings had been initiated at that time. Once the entire amount stood assessed, there was no scope for issue of a fresh notice under s. 148 of the Act to assess the same income once again. Penalty proceedings during the course of subsequent reassessment proceedings could only be initiated if the AO had discovered any undisclosed income over and above the income which had already been assessed vide order dt. 11th March, 1991. A notice under s. 148 of the Act can only be issued to bring to tax any income which had earlier escaped assessment. In the present case, it is evident that vide order dt. 7th March, 1994, the income was assessed at the same figure of Rs. 2,02,190, which was the income assessed vide order dt. 11th March, 1991. There was, thus, no additional income assessed vide order dt. 7th March, 1994, warranting notice under s. 271(1)(c) of the Act. In view of the above, we are satisfied that no substantial question of law arises out of the order of the Tribunal for consideration by this Court. The appeal is, accordingly, dismissed in limine.
[Citation : 269 ITR 255]
