Penalty u/s 271(1)(c) could not be levied on income declared in revised return filed suo motu under section 139(5)

Overview:

Where assessee filed revised return of income under section 139(5) declaring NIL income suo motu by adding certain amount under section 14A, no penalty under section 271(1)(c) could be levied on ground that assessee furnished inaccurate particulars of income in original return.

Assessee originally filed return of income declaring certain income. In revised return assessee declared NIL income by making addition under section 14A. AO imposed penalty under section 271(1)(c) on the ground that the revised return by the assessee was not filed voluntarily but only after issuing a scrutiny notice under section 143(2). CIT(A) came to a finding of fact that the filing of revised return of income was done by assessee suo motu and not because of detection by revenue, deleted penalty. Tribunal affirmed order of CIT(A).

It was held that both the CIT(A) as well as Tribunal had recorded a concurrent finding of fact that revised return of income under section 139(5) was filed by the assessee on its own and not on account of any detection of inaccurate particulars of income being filed by the assessee in its original return of income. The finding of fact rendered both by the CIT(A) and the Tribunal that the revised return of income was filed by the assessee suo motu and not consequent to detection of inaccurate particulars of income by the AO, was not shown to be perverse. Admittedly, there was no allegation that the revised return of income filed by the assessee, contained any inaccurate particulars of income. No question of law arose.

Decision: In assessee’s favour.

IN THE BOMBAY HIGH COURT

M.S. SANKLECHA & RIYAZ I. CHAGLA, JJ.

Pr. CIT v. Sterlite Opportunities and Ventures Ltd.

Income Tax Appeal No. 894 of 2015

21 February, 2018

Appellant by: Tejveer Singh

Respondent by: Mrunal Parekh with Divya Hirawat i/b. DMD Advocates

P.C.

This appeal under section 260A of the Income Tax Act, 1961 (the Act), challenges the order dated 22-1-2014 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order dated 22-1-2014 is in respect of assessment year 2005-06.

2. Revenue urges the following question of law, for our consideration :–

“(a) Whether on the facts and in the circumstance of the case and in law, the Tribunal is right in holding that penalty under sections 271(1)(c) cannot be levied on income declared in the revised return of income filed under section 139(5) of the Income Tax Act, 1961?”

3. The Respondent originally filed its return of income for assessment year 2005-06, declaring a loss of Rs. 20.64 Crores. On receipt of scrutiny notice under section 143(2) of the Act, the Respondent filed revised return of income, reducing its income to ‘Nil’. This by adding a sum of Rs. 20.64 Crores under section 14A of the Act. Thereafter, assessment was completed at Nil income, as declared by the respondent-assessee in its revised return of income.

4. Thereafter, the present penalty proceedings were initiated by the assessing officer on the ground that the revised return by the respondent-assessee was not filed voluntarily but only after issuing a scrutiny notice under section 143(2) of the Act. This on the ground of having filed inaccurate particulars of income and imposed penalty of Rs. 7.40 Crores.

5. Being aggrieved, Respondent carried the issue in Appeal to the Commissioner (Appeals) [CIT(A)]. By order dated 21-7-2011, the Commissioner (Appeals) deleted the penalty. This after having recorded a finding of fact by placing reliance upon the order of the Tribunal dated 27-5-2011 in quantum proceedings. In the quantum proceedings, the Tribunal has held that there is nothing either in the order of the assessing officer or in the order of the Commissioner (Appeals) to show that the revised return of income was filed only after the detection of the Revenue that the original return contained inaccurate particulars. It further records that the Tribunal in its order dated 27-5-2011 has recorded the fact that even at the hearing, the departmental representative was unable to show that revised return was filed only after the assessing officer had detected inaccurate particulars of income in the original return of income. Thus, the Commissioner (Appeals) comes to a finding of fact that the filing of the revised income was voluntarily done by the Respondent suo motu and not because of detection by the Revenue.

6. Being aggrieved by the order dated 21-7-2011 of the Commissioner (Appeals), deleting the penalty, the Revenue filed an appeal to the Tribunal. The Tribunal by the impugned order has also while coming to finding of fact, reiterates the finding in its earlier order dated 27-5-2011 in quantum proceedings viz, the revised return filed under section 139(5) of the Act, was valid return of income filed by the Respondent on its own and not on the basis of any investigation/ discovery done by the department of inaccurate particulars in the original return of income. Thus, holding that there is no basis for invoking section 271(1)(c) of the Act.

7. Mr. Tejveer Singh, learned Counsel for the Revenue states that the revised return was filed only after the scrutiny notice was issued to the Respondent. Therefore, the penalty imposed upon the Respondent is justified. On the other hand, Mr. Parekh reiterates the finding in the orders of Commissioner (Appeals) and the Tribunal.

8. We find that both the Commissioner (Appeals) as well as Tribunal have recorded a concurrent finding of fact that revised return of income under section 139(5) of the Act was filed by the respondent-assessee on its own and not on account of any detection of inaccurate particulars of income being filed by the Respondent in its original return of income. The finding of fact rendered both by the Commissioner (Appeals) and the Tribunal that the revised return of income was filed by the Respondent suo motu and not consequent to detection of inaccurate particulars of income by the assessing officer, is not shown to be perverse. Admittedly, there is no allegation that the revised return of income filed by the respondent-assessee, contains any inaccurate particulars of income.

9. In these circumstance, particularly the finding of fact rendered both by the Commissioner (Appeals) and the Tribunal, the question as proposed does not give rise to any substantial question of law.

10. Accordingly, appeal dismissed. No order as to costs.