T.V.Magaadevan, Thanjavur V. DCIT, CHENNAI

ITA 368/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64362 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-09-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 01-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: K RAVI
• Keywords: Retrospective amendment; Reasonable cause
• Section: 142(1); 27; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NOS.367 & 368/MDS/2011 ASSESSMENT YEARS : 2004-05 & 2005-06 SHRI T.V.MAGAADEVAN NO.5, FIRST CROSS STREET PARISUTHM NAGAR THANJAVUR 613 001 [PAN AAEPM8167E] VS THE DY. CIT CENTRAL CIRCLE II(4) CHENNAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAVI RESPONDENT BY : DR.S.MOHARANA, CIT/DR DATE OF HEARING : 26-09-2012 DATE OF PRONOUNCEMENT : 28-09-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE A SSESSEE AGAINST SEPARATE ORDERS OF THE CIT(A)-II, CHENNAI, DATED 15.12.2010. 2. IN BOTH THE APPEALS, THE ASSESSEE HAS RAISED COMMO N GROUND OF APPEAL WHICH IS THAT THE CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER LEVYING PENALTY U/S 271( 1)(C) OF THE ACT. I.T.A.NO. 367 & 368/11 :- 2 -: 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2004-05 ON 12.12.2006 SHOWING INCOME OF ` 4,99,140/- AND FOR ASSESSMENT YEAR 2005-06 FILED R ETURN OF INCOME ON 31.12.2007 SHOWING INCOME OF ` 10,49,250/-. THE ASSESSING OFFICER ISSUED NOTICE U/S 142(1) OF THE ACT FOR ASSESSMENT YEAR 2004-05 ON 27.12.2004 AND FOR ASSESSMENT YEAR 2005-06 ON 1.2.2007. AS THE RETURN OF INCOME WAS FILED BEYOND THE TIME ALLOWED UNDER THE INCOME-TAX ACT, HE TREATED THE RETURN FIL ED AS INVALID. THE ASSESSMENT WAS FRAMED FOR BOTH THE YEARS UNDER CONS IDERATION BY PASSING AN ORDER U/S 144 OF THE ACT DETERMINING TH E INCOME FOR BOTH THE YEARS UNDER CONSIDERATION AS PER THE INCOME COM PUTATION STATEMENT FILED BY THE ASSESSEE. 4. THEREAFTER, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, IN RESPONSE TO WHICH THE ASSESSEE FILED LETTER DATED 18.1.2007 IN ASSESSMENT YEAR 2004-05 AND LETTE DATED 23.6.2008 IN ASSESSMENT YEAR 2005-06. IN THE SAID LETTERS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSE E FILED RETURN OF INCOME AND PAID TAXES THEREON; THE ASSESSEE FURNIS HED THE BANK STATEMENT DURING THE ASSESSMENT PROCEEDINGS; THE A SSESSEE HAD NOT CONCEALED ANY PARTICULARS OF INCOME OR FURNISHED IN ACCURATE PARTICULARS OF SUCH INCOME AND THAT THE ASSESSING OFFICER COMPL ETED THE I.T.A.NO. 367 & 368/11 :- 3 -: ASSESSMENT U/S 144 OF THE ACT ACCEPTING THE INCOME RETURNED WHICH SHOWS THAT THERE WAS NO CONCEALMENT OF INCOME BY T HE ASSESSEE. 5. THE ASSESSING OFFICER REJECTED THE SUBMISSIONS OF T HE ASSESSEE BY OBSERVING THAT THE ASSESSEE FILED RETU RN OF INCOME ONLY AFTER THE ISSUE OF NOTICE U/S 142(1) AND THAT TOO AFTER A LAPSE OF TIME ALLOWED FOR FILING A VALID RETURN. HE ALSO OBSERVE D THAT THOUGHT HE ASSESSEE HAD TAXABLE INCOME HE HAD NOT PAID ANY ADV ANCE TAX BUT PAID THE TAX WITH INTEREST IN DECEMBER 2006 FOR ASS ESSMENT YEAR 2006 FOR ASSESSMENT YEAR 2004-05 AND IN DECEMBER 2007 FO R ASSESSMENT YEAR 2005-06. HE ALSO OBSERVED THAT THE CASE OF TH E ASSESSEE WAS SIMILAR TO THE CIRCUMSTANCES STATD UNDER EXPLANATIO N 3 TO SECTION 271(1)(C) OF THE ACT. HENCE, HE LEVIED PENALTY OF ` 1,23,742/- IN ASSESSMENT YEAR 2004-05 AND ` 3,23,995/- IN ASSESSMENT YEAR 2005- 06 BEING THE MINIMUM AMOUNT OF PENALTY LEVIABLE. 6. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) FOR BOTH THE YEARS. THE ASSESSEE ARGUED THAT THE PENALTY WAS N OT LEVIABLE AS PER EXPLANATION 3 TO SECTION 271(1)(C) OF THE ACT BECA USE THE ASSESSEE HAD FURNISHED A RETURN WITHIN THE PERIOD SPECIFIED IN SECTION 153(1). IT WAS ALSO ARGUED THAT EXPLANATION 3 TO SECTION 271( 1)(C) WAS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AND LEVY OF PENALTY BY THE I.T.A.NO. 367 & 368/11 :- 4 -: ASSESSING OFFICER EVIDENTLY BASED ON THE SAID EXPLA NATION IS INVALID. THE ASSESSEE ARGUED THAT PENALTY CANNOT BE LEVIED FOR NON-PAYMENT OF ADVANCE TAX. IT WAS ALSO SUBMITTED THAT IT IS C LEAR THAT THERE WAS NO SATISFACTION ARRIVED AT BY THE ASSESSING OFFICER TH AT THERE WAS ANY CONCEALMENT OF INCOME AND THAT THE SATISFACTION, IF ANY, WAS ONLY TO THE EXTENT THAT THE ASSESSEE HAS NOT PAID THE ADVA NCE TAX. THE ASSESSEE ALSO ARGUED THAT THE ASSESSMENT WAS COMPLE TED ACCEPTING THE INCOME RETURNED BY THE ASSESSEE WITHOUT ANY MO DIFICATION AND THEREFORE, IT CANNOT BE SAID THAT ANY PARTICULAR OF INCOME WERE CONCEALED BY THE ASSESSEE OR ANY INACCURATE PARTIC ULARS WERE FURNISHED. IT WAS ALSO SUBMITTED THAT INITIATION O F PROCEEDINGS U/S 271(1)(C) OF THE ACT BY ADDING A LINE AT THE BOTTOM OF THE ASSESSMENT ORDER IS DONE IN A MECHANICAL MANNER WITHOUT INDICA TING THAT THERE WAS DUE APPLICATION OF MIND PRIOR TO THE SAME. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE BEING AWAY AT TANJAVUR WITH HIS A.R. AT CHENNAI HAD A REASONABLE CAUSE FOR THE DELAY IN FIL ING HIS RETURN BUT HE HAD PAID THE TAXES BEFORE FILING THE RETURN AND THE REFORE, LEVY OF PENALTY U/S 271(1)(C) OF THE ACT WAS NOT VALID. 7. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE, CONFIRMED THE PENALTY BY MAKING SIMILAR O BSERVATIONS EXCEPT CHANGE IN FIGURES IN BOTH THE YEARS UNDER CONSIDERA TION AS UNDER: I.T.A.NO. 367 & 368/11 :- 5 -: 11 . I HAVE CONSIDERED THE SUBMISSIONS OF T H E LEARNED A.R. IT IS UNDISPUTED THAT THE APPELLANT HAD TAXABLE INCOME (LEASE RENT FROM DHANVANTHRY MEDICAL SHOP) BUT DID NOT FIL E HIS RETURN OF INCOME BY THE DUE DATE AND DID NOT PAY AN Y ADVANCE TAX. THIS ACT OF THE APPELLANT CONSTITUTES CONCEALM ENT U/S 271(1)(C) BECAUSE WHEN THERE WAS A TAXABLE LEASE RE NTAL INCOME THE APPELLANT CONCEALED IT BY NOT FURNISHING HIS RETURN AND CONTINUED TO DO SO EVEN AFTER A NOTICE U/S 142( 1) WAS ISSUED BY THE A.O. AND THE APPELLANT WAS REPEATEDLY REMINDED BY HIM. THE EXPLANATION THAT HE HAD REASO NABLE CAUSE AS HE WAS AWAY AT TANJAVUR AND HIS REPRESENTATIVE WAS AT CHENNAI IS UNTENAB L E AND CLEAR L Y AN AFTERTHOUGHT BECAUSE SUCH A SUBMISSION WAS NEVER MADE BEFORE THE A.O. DU RING THE ASSESSMENT/PENALTY PROCEEDINGS THOUGH THE A. R. OF THE APPELLANT WAS APPEARING BEFORE THE A.O. DURING THE ASSESSMENT/PENALTY PROCEEDINGS. THE APPELLANT IS THEREFORE LIABLE FOR LEVY OF PENALTY U/S 271(1)(C) ON THE INCOME ASSESSED EVEN WHEN IT IS THE SAME AS SHOWN IN THE R ETURN FORM FILED ON 12.12.2006. THE PENALTY OF RS. 1,23,7 42 LEVIED U/S 271 (L)(C) IS, THEREFORE, SUSTAINED. 8. BEFORE US, THE A.R REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 9. ON THE OTHER HAND, THE CIT/DR SUPPORTED THE ORDER S OF THE LOWER AUTHORITIES. HE, RELYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MAYA RANI PUNJ VS CIT, [1986] 157 ITR 330(SC), SUBMITTED THAT THE HON'BLE SUPREME COURT HAS HELD T HAT IN VIEW OF THE LANGUAGE USED IN THE SECTION, THE POSITION WAS BEYO ND DISPUTE THAT THE LEGISLATURE INTENDED TO DEEM THE NON-FILING OF THE RETURN TO BE A CONTINUING DEFAULT THE WRONG FOR WHICH PENALTY WA S TO BE VISITED, COMMENCED FROM THE DATE OF DEFAULT AND CONTINUED MO NTH AFTER MONTH UNTIL COMPLIANCE WAS MADE AND THE DEFAULT CAME TO A N END. HE FURTHER SUBMITTED BY RELYING ON THE DECISION OF THE HON'BLE SUPREME I.T.A.NO. 367 & 368/11 :- 6 -: COURT IN THE CASE OF PRAKASH NATH KHANNA & ANOTHER VS CIT, [2004] 266 ITR 1(SC), THAT THE HON'BLE SUPREME COURT HAS H ELD THAT INFRACTIONS WHICH ARE COVERED BY SECTION 276CC RELA TE TO NON- FURNISHING OF RETURN WITHIN THE TIME IN TERMS OF SU B-SECTION (1) OR INDICATED IN THE NOTICE GIVEN UNDER SUB-SECTION(2) OF SECTION 139; THERE IS NO CONDONATION OF THE SAID INFRACTION EVEN IF A RETURN IS FILED IN TERMS OF SUB-SECTION(4); SECTION 276CC REFERS TO DUE TIM E IN RELATION TO SUB- SECTIONS (1) AND (2) OF SECTION 139 AND NOT TO SUB- SECTION(4). HE FURTHER SUBMITTED THAT ON THE EARLIER OCCASION WHEN THE MATTER CAME UP FOR HEARING BEFORE THE TRIBUNAL, THE TRIBUNAL HA S SPECIFICALLY ASKED AS TO WHETHER THE RETURNS IN THE EARLIER ASSESSMENT YEARS WERE FILED IN TIME BY THE ASSESSEE OR NOT. HE SUBMITTED THAT IN SPITE OF A SPECIFIC QUERY RAISED BY THE BENCH, THE A.R OF THE ASSESSEE , EVEN TILL TODAY, HAS NOT FILED THE RELEVANT ASSESSMENT ORDERS OR ANY OTHER EVIDENCES EVIDENCING THAT THE RETURNS IN THE EARLIER YEARS WE RE FILED IN TIME BY THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE IS A HABITUAL DEFAULTER AND IN NONE OF THE EARLIER PREVIOUS YEARS THE ASSE SSEE HAD FILED THE RETURNS OF INCOME IN TIME. HE SUBMITTED THAT THE ASSESSEE INTENTIONALLY DELAYED THE RETURNS AND FILED JUST AT THE NICK OF TIME WHEN THE ASSESSMENT WAS GETTING TIME BARRED SO THAT THE ASSESSING OFFICER COULD NOT CARRY OUT ANY INVESTIGATION AND VERIFICAT ION. THUS, THE I.T.A.NO. 367 & 368/11 :- 7 -: ASSESSEE WAS VERY TACTFULLY AVOIDING INVESTIGATION BY THE ASSESSING OFFICER. HE VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE ASSESSEE SHOULD BE VISITED IN THESE YEARS WITH PENALTY SO THAT IN THE YEARS TO COME THE ASSESSEE WHO IS HAVING SCANT REGARD FOR THE LAW WILL COME TO RESPECT THE LAW AND COMPLY WITH THE SAME BY FILING THE RETURNS IN TIME. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE,T HE ASSESSING OFFICER LEVIED PENALTY U/S 27 1(1)(C) OF THE ACT OF ` 1,23,742/- IN ASSESSMENT YEAR 2004-05 AND ` 3,23,995/- IN ASSESSMENT YEAR 2005-06 ON THE GROUND THAT THE ASS ESSEE HAS FILED NO VALID RETURN OF INCOME WITHIN THE TIME ALLOWED U NDER THE INCOME- TAX ACT, THOUGH THE ASSESSEE HAD TAXABLE INCOME AN D INSPITE OF THE FACT THAT NOTICE U/S 142(1) WAS ISSUED TO THE ASS ESSEE. 11. ON APPEAL, THE CIT(A) CONFIRMED THE ORDER OF THE AS SESSING OFFICER. 12. BEFORE US, THE ASSESSEE CONTENDED THAT LEVY OF PEN ALTY U/S 271(1)(C) OF THE ACT WAS NOT VALID AS NO SATISFACTI ON AS REQUIRED UNDER LAW WAS RECORDED BY THE ASSESSING OFFICER IN THE RE LEVANT ASSESSMENT ORDER BEFORE INITIATING PENALTY U/S 271(1)(C) OF THE ACT. WE FIND THAT I.T.A.NO. 367 & 368/11 :- 8 -: A PERUSAL OF THE RELEVANT ASSESSMENT ORDER SHOWS TH AT THE ASSESSING OFFICER HAS RECORDED THAT PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS INITIATED SEPARATELY. THUS, IN VIEW OF THE PROVISIONS OF SECTION 271(1B)OF THE ACT WHICH WAS INSERTED IN THE ACT WIT H RETROSPECTIVE EFFECT FROM 1.4.1989 AND WHICH PROVIDES THAT WHEN A N ADDITION IS MADE ON ASSESSMENT AND PENALTY PROCEEDING U/S 27 1(1)(C) OF THE ACT IS INITIATED IN THE COURSE OF THE ASSESSMENT, T HEN THE SAME SHALL CONSTITUTE SATISFACTION OF THE ASSESSING OFFICER FO R INITIATION OF PENALTY. IN THE INSTANT CASE, AS IT IS NOT IN DISPUTE THAT N O VALID RETURN OF INCOME WAS FILED BY THE ASSESSEE WITHIN THE TIME LIMIT PR OVIDED U/S 139 OF THE ACT OR WITHIN THE TIME LIMIT PROVIDED IN THE NO TICES ISSUED U/S 142(1) OF THE ACT, THE ENTIRE INCOME ASSESSED IN TH E ASSESSMENT ORDER AMOUNTS TO ADDITION MADE BY THE ASSESSING OFFICER I N THE ASSESSMENT. THUS, WE DO NOT FIND ANY FORCE IN THE ABOVE ARGUMEN T OF THE A.R OF THE ASSESSEE. THE OTHER CONTENTION RAISED BY THE A .R WAS THAT THE ASSESSED INCOME IN THE INSTANT CASE IS THE SAME WHI CH WAS SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME. WE FIND THA T THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004-05 ON 12.12.2006 AND FOR THE ASSESSMENT YEAR 2005-06 ON 3 1.12.2007. THUS, THE AFORESAID RETURNS OF INCOME WERE NOT VALI D RETURNS AS THEY WERE NOT FILED WITHIN THE TIME ALLOWED U/S 139(4) OF THE ACT AND IN I.T.A.NO. 367 & 368/11 :- 9 -: VIEW OF EXPLANATION 3 TO SECTION 271(1)(C) OF THE ACT THE ENTIRE ASSESSED INCOME CONSTITUTES THE CONCEALED INCOME. THE LAST ARGUMENT OF THE A.R OF THE ASSESSEE WAS THAT THE RETURNS WE RE FILED WITHIN THE TIME ALLOWED U/S 153(1). HOWEVER, THE A.R COULD N OT POINT OUT WHY PENALTY U/S 271(1)(C) OF THE ACT IS NOT LEVIABLE WHEN THE RETURN IS NOT FILED WITHIN THE TIME ALLOWED U/S 139 OF THE ACT WHEN THE ASSESSEE HAD TAXABLE INCOME AND HOW THE DEFAULT IS MITIGATED BY FILING THE RETURN BEFORE THE TIME LIMIT OF COMPLETION OF ASSES SMENT SPECIFIED U/S 153(1) OF THE ACT. IN THESE CIRCUMSTANCES, WE DO N OT FIND ANY GOOD REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A). IT IS CONFIRMED. THE GROUNDS OF APPEAL OF THE ASSESSEE FOR BOTH THE ASSE SSMENT YEARS UNDER CONSIDERATION ARE DISMISSED. 13. NO OTHER POINT WAS ARGUED OR PRESSED AT THE TIME OF HEARING. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSE SSEE ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 28 TH OF SEPTEMBER, 2012, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 28 TH SEPTEMBER, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR I.T.A.NO. 367 & 368/11 :- 10 -: IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER] I.T.A.NOS.367 & 368/MDS/2011 ASSESSMENT YEARS : 2004-05 & 2005-06 SHRI T.V.MAGAADEVAN NO.5, FIRST CROSS STREET PARISUTHM NAGAR THANJAVUR 613 001 [PAN AAEPM8167E] VS THE DY. CIT CENTRAL CIRCLE II(4) CHENNAI (APPELLANT) (RESPONDENT) CORRIGENDUM DR.S. MOHARANA, CIT/DR, VIDE LETTER DATED 14.12 .2012, HAS STATED THAT THIS CASE WAS ARGUED BY SHRI K. RAMASAM Y, SENIOR STANDING COUNSEL AND NOT BY HIMSELF, THEREFORE, IN THE ORDER DATED 28.9.2012 PASSED BY THE TRIBUNAL, NECESSARY CORRECT ION TO THIS EFFECT IS REQUIRED. 2. WE FIND FROM RECORDS THAT NECESSARY CORRECTIO N HAS BEEN MADE BY THE BENCH CLERK IN THE ORDER SHEET TOGETHER WITH HIS SIGNATURE. THUS, IN THE CAUSE TITLE OF OUR ORDER DATED 28.9.20 12, THE NAME OF RESPONDENTS COUNSEL IS CORRECTED AS SHRI K. RAMASAMY, SENIOR STANDING COUNSEL IN PLACE OF DR.S.MOHARANA, CIT/DR. THE FINDINGS AND CONCLUSION OF THE ORDER WILL REMAIN UNCHANGED. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER I.T.A.NO. 367 & 368/11 :- 11 -: DATED: 17 TH DECEMBER, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR