KANHAIYALAL RAMESHWAR DAS,KOTA V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR

ITA 1453/JPR/2024

AI Insights

The case involves appeals by Kanhaiyalal Rameshwar Das against penalties imposed for the assessment years 2012-13 and 2014-15 under section 271(1)(c) of the Income Tax Act, 1961, following a search and seizure operation. The penalties were levied after the assessee filed revised returns declaring additional income. The primary legal contention was whether the penalties were justified given that the revised returns were accepted by the Assessing Officer without any discrepancies. The Tribunal examined precedents and the specific circumstances of the case, ultimately deciding in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780125 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 03-12-2024
• Other Referred Cases: Kumar Gupta vs DCIT, R Elangovan vs DCIT, Mahesh Jain vs DCIT, ONGC Mittal vs DCIT, Manjunatha Cotton & Ginning Factory vs CIT, Dharamendra Textile Processors vs CIT, Virgo Marketing vs CIT, Narayana Heights & Towers vs I.T.O., Shankar Lal Khandelwal vs DCIT, Radha Mohan Maheshwari vs DCIT, Murari Lal Mittal vs DCIT, Mrs Mradula Agarwal vs I.T.O., Shevata Construction Co. Pvt. Ltd. vs CIT, Ganga Iron & Steel Trading Co vs CIT, Pr.CIT vs Jahangir H.C. Jahangir
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY; THRU
• Assessee Lawyers: RAJNI KANT BHATRA; SUBMITTING A
• Keywords: Set aside; Revised return; Question of law; Depreciation; Unexplained investment; Document seized; Documents seized; Search and seizure; Wrong claim; Unabsorbed depreciation; Initiation of penalty proceedings; Bogus
• Section: 148; 143(3); 154; 271(1)(c); 132; 153A; 139; 40(b)

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” JAIPUR Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;djvihy la-@ITA No. 1453 & 1454/JPR/2025 fu/kZkj.k o\"kZ@Assessment Year: 2012-13 & 2014-15 Kanhaiyalal Rameshwar Das Rishabh Bhawan, New Colony Gumanpura, Kota 324 007 cuke Vs. The ACIT Central Circle-3 Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABFK 4323 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri Rajnikant Bhatra, CA jktLo dh vksj ls@Revenue by:Shri Gautam Singh Choudhary, JCIT-DR (Thru: V.C). lquokbZ dh rkjh[k@Date of Hearing : 09/09/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 08/10/2025 vkns'k@ORDER PER : RATHOD KAMLESH JAYANTBHAI, AM Both these appeals have been filed by the assessee against two different orders of the ld. CIT(A), Jaipur -4 both dated 16-10-2024 for the assessment years 2012-13 and 2014-15 in the matter of confirming penalty u/s 271(1) (c ) of the Act 1961, raising therein following grounds of appeal; ITA No. 1453/JPR/2024 – A.Y. 2012-13 ‘’1. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in not accepting the plea of the appellant that the proceedings initiated by the ld. AO for imposition of penalty u/s 271(1)(c) of the IT Act, 1961 and consequent penalty of Rs 4,04,481 imposed by him is wrong and bad in law. Printed from counselvise.com 2 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR 2. That without prejudice to the ground No. (1) above on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming penalty of Rs. 4,04,481/- imposed by the learned AO u/s 271(1)(c) of the IT Act, 1961.’’ ITA No. 1454/JPR/2024 – A.Y. 2014-15 ‘’1. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in not accepting the plea of the appellant that the proceedings initiated by the ld. AO for imposition of penalty u/s 271(1)(c) of the IT Act, 1961 and consequent penalty of Rs 2,79,985/- imposed by him is wrong and bad in law. 2. That without prejudice to the ground No. (1) above on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming penalty of . Rs 2,79,985/- - imposed by the learned AO u/s 271(1)(c) of the IT Act, 1961.’’ 2. First of all, we take up the appeal of the assessee for adjudication relating to assessment year 2012-13 wherein brief facts of the case are that a search and seizure action u/s 132(1) of the Act was carried out on 5-02- 2015 in the case of Bundi Silica Group, Kota to which the assessee belongs. It is noted that the AO issued a notice u/s 153 of the Act to the assessee on 13-05-2015. In response to the notice, the assessee filed its return of income on 08-06-2015 for the Assessment Year 2012-13 declaring a total income at Rs.92,85,050/-. The assessee filed its revised return of income on 19-10-2015 for the assessment year 2012-13 declaring a total income at Rs.1,05,94,050/-. Thus, the AO completed the assessment u/s 143(3) r.w.s. 153A vide order dated 28-12-2016 at a total income of Rs.1,40,62,140/-. Further, the order u/s 154 of the Act was also Printed from counselvise.com 3 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR made on 25-09-2017 and the income was assessed at Rs.1,61,76,089/- by making additions on account of disallowance of unabsorbed depreciation. The assessee filed the appeal before the ld. CIT(A)-4, Jaipur which was disposed off vide order 04-04-2018 by the ld. CIT(A). After giving the effect of the above order, the assessed income was reduced to Rs.1,05,94,050/- which was as declared in the revised return of income filed on 19.10.2015. Since, there was change in the return of income originally filed and thereafter subsequently declared at higher amount by way of revised return of income ld. AO initiated the penalty proceedings u/s 271(1)(c) of the Act vide notice dated 28-12-2016 in the case of the assessee. The same finds mentioned at page 2 of the penalty order u/s 271(1)(c) dated 23-03-2020. Finally, the AO imposed penalty of Rs.4,04,481/- u/s 271(1)(c ) of the Act giving following narration in his order dated 23-03-2020; ‘’9.1 In view of the above discussion, it is hereby held that the assessee has altogether failed to establish that penalty u/s 271(1)© is not leviable in this case. Therefore, I am satisfied that the assessee had concealed income to the tune of Rs.13,09,000/- for the year under consideration and it is a fit case for levy of penalty u/s 271(1)(c ) of the Income Tax Act, 1961. The penalty amount is worked out here as under:- Description Amount (Rs.) Total concealed income liable for penalty u/s 271(1)(c ) of I.T. Act, 1961 13,09,000 Tax on concealed income 4,04,481 Minimum penalty @ 100% 4,04,481 Maximum penalty @ 300% 12,13,443 Printed from counselvise.com 4 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR Penalty amount R/o 4,04,481 ‘’I, therefore, impose penalty of Rs.4,04,481/- (100% of tax sought to be evaded). Necessary form and challan are being issued.’’ 3. Feeling dissatisfied by the order levying penalty the assessee carried the matter before the ld. CIT(A) who confirmed the penalty imposed by the AO and thereby he dismissed the appeal of assessee by observing as under : Ground No. 1 – para -11 page 36 & 37 of ld. CIT(A) “11. In the instant case, the notice initiating the penalty proceedings talks about initiation of penalty proceedings U/s 271AAB of the Act in respect of undisclosed income of the specified previous year. However, while passing the penalty proceedings, the Assessing officer has given a clear finding as reflected in the penalty order that the assessee is liable for penalty U/s 271AAB(1)(a) which provides for levy of penalty @ 10% of the undisclosed income. As held by the Coordinate Bench (supra), the uncertain charge at the time of initiation of penalty has been made good and substituted with a conclusive default at the time of passing the penalty order and that in such a case, no fault can be found in the penalty order. In such a case, we do not see any infirmity in the initiation of penalty proceedings and consequent penalty order so passed by the Assessing officer and the contentions so raised by the ld AR in this regard cannot be accepted. Further, we find that the decision of the Coordinate Bench in case of R Elangovan (supra) so relied upon by the ld AR, has been rendered without taking into consideration the earlier decision of the Co-ordinate Bench in case of Mahesh Jain (Supra) and decision of the larger Bench of the Tribunal in case of ONGC Mittal (Supra) which has duly considered the decision in case of Manjunatha (supra) and thus doesn't act as a binding precedent. As far as decision of the Hon'ble Rajasthan High Court is concerned, we find that the same in fact supports the case of the Revenue as a definite finding has been record in the penalty order. In light of above discussions, the additional ground so raised by the assessee is hereby dismissed.” (emphasis supplied) In view of ratio of judgement of Hon’ble ITAT, Jaipur Bench in Kumar Gupta vs DCIT in ITA No. 359/JP/2017, the other judgements of Hon’ble ITAT relied upon by the appellant are respectfully not binding precedent. Printed from counselvise.com 5 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR Relying upon the judgements is discussed above, and considering the specific facts of the case as discussed in earlier paras, the validity of the penalty proceedings is hereby upheld and this ground of appeal is hereby dismissed.” Ground No. 2 – para -5.2 page 41 & 42 of ld. CIT(A) 5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the penalty order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The appellant has made the submission on the issue in the appeal and placed reliance on the judgements and contended that the additional income was offered by the appellant in the income tax return under section 153A of the Act on his own and that the income under section 153A of the Act is treated as income under section 139(1) of the Act and thus when the income has already been offered and declared in the income tax return, no penalty is leviable. The appellant has submitted that the penalty proceedings u/s 271(1)(c) of the Act was initiated on the ground that appellant firm offered additional income in the return filed in response to notice u/s 153A of the IT Act, 1961 which due to inadvertent mistake originally left to be included in the original return filed u/s 153A of the IT Act, 1961 The Ld. AO in the penalty order levied penalty on the additional income shown in return of income filed u/s 153A of the Act. It is also submitted by the appellant that the explanation-1 to section 271 (1) (c) is not applicable as the amount was included suo moto in return u/s 153A to correct the finding of assessee. The CIT (A)-4 on similar facts in case of KGK Creations P. Ltd vide dated 30-11-2015 in ITA No. 559/2013-14 it was held that when in the return filed in compliance to notice u/s 153A assessee suo moto corrected any mistake/wrong claim etc. in return filed u/s 139 (1) then explanation to section 271 (1) (c) are not applicable. As against this it is seen from the penalty order that the Id. AO has noted that \"During the course of assessment proceedings, it was noticed from the seized documents found during the search proceedings that the assessee has declared additional income of Rs. 13,09,000/- on account of unexplained investment in plot. As per statement of the partner of this firm Sh. Ashok Bansal recorded u/s 132(4) of the Income tax Act, 1961, Sh. Ashok Bansal admitted that the firm had made investment in plot out of its undisclosed income. The above statement was reaffirmed by reply filed vide letter dated 16.03.2015 during the post search proceedings. The assessee declared the above income in its revised return of income which was filed on 19.10.2015 for the year under consideration.’’ The appellant is silent on the above findings of the penalty order. The copy of submissions made before the assessing authority are also not fled even though specifically requested in the present appeal proceedings. Printed from counselvise.com 6 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR From the perusal of the judgements on the issue it is understood that the penalty under section 271(1)(c) is leviable on the additional income offered in the income tax return under section 153A if such income which is offered in the income tax return is related to or unearthed during the course of search and seizure action and in case the additional income offered in income tax retum under section 153A is not related to or not unearthed during the course of search and seizure action and is offered by the assessee on his own suo-moto to correct earlier mistake, in that case the penalty under section 271(1)(c) is not leviable. In other words the appellant is required to show that the reason of the return of income whereby the income was enhanced was on his own accord and was bona fide and was not due to any finding during or evidence or information gathered during the search and seizure action. In view of the above discussion, the appellant has not discharged the onus to show that the additional income offered in the return of income under section 153A is not related to and not unearthed duing the course of search and seizure action and is offered by the assessee on his own to correct earfier mistake. And further it is stated by the leamed AO in the penalty order that the income was enhanced by the appellant on the basis of incriminating documents detected by the Department and this is not been factually countered by the appellant, Accordingly the penalty levied by the learned AO is hereby upheld. Accordingly this ground of appeal is hereby dismissed.’’ 4. During the course hearing the ld. AR of the assessee filed a detailed written submission which reads as under: The above appeal has been filed by assessee firm against the appeal order dated 16-10-2024 passed by the Ld. CIT(A)-4, Jaipur in appeal No. CIT(A), Jaipur-4/10011/2020-21. The Assessee has raised following solitary ground in the appeal: 1. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in not accepting the plea of the appellant that the proceedings initiated by the ld. AO for imposition of penalty u/s 271(1)(c) of the IT Act, 1961 and consequent penalty of Rs 404481 imposed by him is wrong and bad in law. 2. That without prejudice to the ground No. (1) above on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming penalty of Rs. 4,04,481/- imposed by the learned AO u/s 271(1)(c) of the IT Act, 1961. Printed from counselvise.com 7 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR 3. That the appellant craves permission to add to or amend to any of grounds of appeal or to withdraw any of them. Facts of the case The assessee is a firm – a concern of Bundi Silica Group, Kota and is engaged in the business of mining and dealing in sand stone items. The assessee firm for the assessment year filed its return of income u/s 139(1) on 28-09-2012 declaring an income of Rs. 92,85,050/- which was processed u/s 143(1). A search u/s 132 was carried out at various business and residential premises of firm and its partners on 05-02-2015. Action of Ld. A.O. The Ld. A.O. thereafter issued notice u/s 153A of I.T. Act, 1961 on 13-05-2015 and in response thereto the assessee filed return of income on 08-06-2015 declaring an income of Rs. 92,85,050/-. However to rectify an inadvertent omission to include surrendered income of Rs. 13,09,000/- in the return filed u/s 153A the assessee e-filed revised return declaring an income of Rs. 1,05,94,050/-. The Ld. A.O. issued notice u/s 143(2) on 05-08-2016 which was complied to by assessee from time to time by submitting required details and explanations. The Ld. A.O. completed impugned assessment order dated 28-12- 2016 u/s 143(3)/153A by making additions of Rs. 34,68,088/- being disallowances out of certain expenses claimed. The assessee firm filed an appeal against the said order. Thereafter Ld. A.O. issued a notice u/s 154 dated 10-7-2017 on the ground that assessee was allowed set off of brought forward unabsorbed depreciation of Rs. 21,13,949/- of A.Y. 2001-02 & earlier years which was irregular as the time limit for set off within 8 years has lapsed as per the provisions of Section 32(2)(iii) of I.T. Act, 1961 and so was not admissible. The assessee firm filed its explanation to object notice u/s 154 and claimed that said unabsorbed depreciation is allowable to it as per law and cited various judicial precedents on the issue in its favour. The Ld. A.O. without appreciating the legal position as pronounced in various judicial precedents held that explanation filed by assessee firm is not tenable and vide impugned order u/s 154 withdrawn the set off of said unabsorbed depreciation to the extent of Rs. 21,13,949/- by enhancing the total income determined in assessment. The assessee firm filed separate appeal(s) for both the order i.e. 153A r.w.s 143(3) dated 28-12-2016 and order dated 25-09-2017 passed u/s 154/153A/143(3). Both appeal were allowed by the than Ld. CIT(A)-4, Jaipur. Finally after appeal effect the assessed income reduced to Rs.1,05,,94,050/- i.e. return of income filed u/s 153A is accepted. Printed from counselvise.com 8 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR The A.O. thereafter took penalty proceedings u/s 271(1)(c) which were initiated vide said notice dated 28-12-2016. The assessee filed its submissions contending that no penalty u/s 271(1)(c) is leviable but A.O. rejected the contentions raised by assessee and vide impugned penalty order dated 23-03- 2020 under appeal levied a penalty of Rs. 4,04,481/- on appellant u/s 271(1)(c) of I.T. Act, 1961. The present appeal is against said penalty order levying penalty of Rs. 4,04,481/- u/s 271(1)(c) of I.T. Act, 1961 on appellant firm. Order of CIT (A) The assessee firm filed appeal before CIT(A) against said penalty order and in course of hearing filed written submissions which reproduced in appeal order of CIT(A). The Ld. CIT(A)-IV in his order dated 16-10-2024 at page no. 36 & 42 para held that “11. In the instant case, the notice initiating the penalty proceedings talks about initiation of penalty proceedings U/s 271AAB of the Act in respect of undisclosed income of the specified previous year. However, while passing the penalty proceedings, the Assessing officer has given a clear finding as reflected in the penalty order that the assessee is liable for penalty U/s 271AAB(1)(a) which provides for levy of penalty @ 10% of the undisclosed income. As held by the Coordinate Bench (supra), the uncertain charge at the time of initiation of penalty has been made good and substituted with a conclusive default at the time of passing the penalty order and that in such a case, no fault can be found in the penalty order. In such a case, we donot see any infirmity in the initiation of penalty proceedings and consequent penalty order so passed by the Assessing officer and the contentions so raised by the ld AR in this regard cannot be accepted. Further, we find that the decision of the Coordinate Bench in case of R Elangovan (supra) so relied upon by the ld AR, has been rendered without taking into consideration the earlier decision of the Co-ordinate Bench in case of Mahesh Jain (Supra) and decision of the larger Bench of the Tribunal in case of ONGC Mittal (Supra) which has duly considered the decision in case of Manjunatha (supra) and thus doesn't act as a binding precedent. As far as decision of the Hon'ble Rajasthan High Court is concerned, we find that the same in fact supports the case of the Revenue as a definite finding has been record in the penalty order. In light of above discussions, the additional ground so raised by the assessee is hereby dismissed.” In view of ratio of judgement of Hon’ble ITAT, Jaipur Bench in Rajendra Kumar Gupta vs DCIT in ITA No. 359/JP/2017, the other judgements of Hon’ble ITAT relied upon by the appellant are respectfully not binding precedent. Printed from counselvise.com 9 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR Relying upon the judgements is discussed above, and considering the specific facts of the case as discussed in earlier paras, the validity of the penalty proceedings is hereby upheld and this ground of appeal is hereby dismissed.” “From the perusal of the judgements on the issue it is understood that the penalty under section 271(1)(c) is leviable on the additional income offered in the income tax return under section 153A if such income which is offered in the income tax return is related to or unearthed during the course of search and seizure action and in case the additional income offered in income tax return under section 153A is not related to or not unearthed during the course of search and seizure action and is offered by the assessee on his own suo-moto to correct earlier mistake, in that case the penalty under section 271(1)(c) is not leviable. In other words the appellant is required to show that the reason of the return of income whereby the income was enhanced was on his own accord and was bona fide and was not due to any finding during or evidence or information gathered during the search and seizure action. In view of the above discussion, the appellant has not discharged the onus to show that the additional income offered in the return of income under section 153A is not related to and not unearthed during the course of search and seizure action and is offered by the assessee on his own to correct earlier mistake. And further it is stated by the learned AO in the penalty order that the income was enhanced by the appellant on the basis of incriminating documents detected by the Department and this is not been factually countered by the appellant. Accordingly the penalty levied by the learned AO is hereby upheld. Accordingly this ground of appeal is hereby dismissed.” The ground wise submission of assessee firm are as under:- Ground No. (1) That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in not accepting the plea of the appellant that the proceedings initiated by the ld. AO for imposition of penalty u/s 271(1)(c) of the IT Act, 1961 and consequent penalty of Rs 404481 imposed by him is wrong and bad in law. Submission of the assessee 1. Initiation of Penalty a) In assessment order:- In the assessment order for the initiation of penalty A.O. stated “penalty notice u/s 271(1)(c) of the I.T. Act, 1961 issued for concealment of income by filing of inaccurate particulars of income” Printed from counselvise.com 10 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR b) Notice u/s 274 Further in the penalty notice u/s 274 read with section 271 of the I. Tax Act dated 28-12-2016 (copy enclosed). A.O. mentioned that:- “Concealed the particulars of income or furnished inaccurate particulars of such income.” c) Notice dated 16-01-2020 “Whereas in the course of proceedings before me for the Assessment Year 2012- 13, it appears to me that you have concealed the particulars of income.” Any notice issued under section 274, read with Section 271(1)(c) of the Income Tax Act, 1961, should specify under which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. In the absence of which no penalty should be levied on the assessee as determination of such limb is sine qua non for imposition of penalty under section 271(1)(c). It is pertinent to note that in the said assessment order and notice Ld. A.O. has not clearly mentioned the limb, on the basis of which, penalty was proposed to be imposed. Ld. A.O. in assessment order or penalty notices did not specified the limb under which the penalty was initiated and simply issued a pre-printed notice without striking off the unnecessary portions of the notice. If the Ld. A.O. was of the view that the assessee has concealed the income or furnishing inaccurate particulars of income then he should have deleted or not mentioned the other limb for imposition of penalty i.e. concealing the particulars of income. The above act of the Ld. A.O. clearly shows that the entire exercise of initiation of penalty proceedings has been done without application of mind. 2. The penalty order was passed on 23-03-2020 where in for penalty imposed additional income of Rs.13,09,000/- shown in return of income filed in response to notice issued u/s 153A of the IT A Act, 1961 by holding that the assessee has not able to discharge the burden that lay upon him by Explanation’ to section 271(1)(c) of the Act. 3. It is submitted that the notice u/s 271 should be specific on imposing of penalty u/s 271 (1) (c) of Income Tax Act, 1961 i.e. concealed particulars of income or furnishing inaccurate particulars of income. Reliance is placed on the decision of Hon'ble Karnataka High Court in the case of CIT Vs. M/s SSA’s Printed from counselvise.com 11 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR EMERALD MEADOWS reported in (2016) 73 taxmann.com 248/242 Taxman 180, wherein Hon'ble Court has held that:- “3. The Tribunal has allowed the appeal filed by the assessee holding the notice issued by the Assessing Officer under section 274 read with Section 271 (1) (c) of the Income Tax Act, 1961 (for short ‘the Act’) to be bad in law as it did not specify which limb of Section 271 (1) (c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The Tribunal, while allowing the appeal of the assessee has relied on the decision of the Division Bench of this Court rendered in the case of COMMISSIONER OF INCOME TAX – VS – MANJUNATHA COTTON AND GINNING FACTORY (2013) 359 ITR 565. 4. In our view, since the matter is covered by judgement of the Division Bench of this Court, we are of the opinion, no substantial question of law arised in this appeal for determination by this Court. The appeal is accordingly dismissed.” The department has filed SLP in Hon'ble Supreme Court which has been dismissed. Therefore, Hon'ble Supreme Court has approved the findings made by Hon'ble Karnataka High Court in the case of CIT Vs. SSA’s Emerald Meadows And CIT Vs Manjunatha Cotton & Ginning Factory & others [2013] 359 ITR 565. Hon'ble Karnataka High Court in the case of Manjunatha Cotton & Ginning Factory [2013] 359 ITR 565 (Karnataka) after referring to the decision of Hon'ble Supreme Court in the case of T. Ashok Pai (Supra) held as under:- “………. Concealment, furnishing inaccurate particulars of income are different. Thus the Assessing officer while issuing notice has to come to the conclusion that whether is it a case of concealment of income or is it a case of furnishing of inaccurate particulars. The Apex Court in the case of Ashok Pai reported in 292 ITR 11 at page 19 has held that concealment of income and furnishing inaccurate particulars of income carry different connotations. The Gujarat High Court in the case of MANU ENGINEERING reported in 122 ITR 306 and the Delhi High Court in the case of VIRGO MARKETING reported in 171 taxman 156, has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing officer proposes to invoke the first limb being concealment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The Standard proforma without striking of the relevant clauses will lead to an inference as to non application of mind…..? Printed from counselvise.com 12 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR 4. In the case of Jyoti Ltd. [2013] taxmann.com 65 (High Court-Guj), the assessing officer in his penalty order noted as under: - “In view of the above facts, it is clear that the assessee concealed income/furnished inaccurate particulars of income. I, therefore, consider it a fit case for levy of penalty u/s 271 (1) (c)” Hon'ble Gujrat High Court in the above case held that, where the Assessing officer in order of penalty did not come to a clear finding regarding the penalty being imposed on concealment of income or on furnishing inaccurate particulars of income, the Tribunal was justified in setting aside the impugned penalty order. Hon'ble Gujrat High Court followed the ratio laid down in the case of New Sorathia Engg. Co. [2006] 282 ITR 642 (Guj-High Court). 5. The above ratio laid down in the case of Manjunatha Cotton & Ginning Factory Supra) has been followed by various High Courts in the below mentioned cases: i Shri Samson Perinchery. ITA 1154, 953, 1097, 1226 of 2014 (Order date – 5.01.2017) (Bombay High Court) ii SSA’s Emerald Meadows [2016] 73 taxmann.com 241 (Karnataka High Court) iii Mitsu Industries Ltd. ITA No. 216 of 2004, Gujarat High Court 6. Further attention is drawn towards the following judgement of the Hon'ble ITAT, Jaipur Bench:- (i) Narayana Heights & Towers, Vs. I.T.O., Ward-2(4) Jaipur ITA No. 1033/JP/2016 has canceled the penalty by holding that:- “3.2 We have heard the rival contention, perused the material available on record and gone through the orders of the authorities below. For the sake of clarity the relevant contents of the Assessment order are reproduced as under:-“ “Penalty u/s 271 (1) (c) is separately as assessee has concealed the income.” Relevant contents of the Penalty Order are reproduced as under: - Printed from counselvise.com 13 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR “As the assessee had not filed any appeal against order of the A.O. and it appears that the assessee is satisfied with the order passed by the A.O. Therefore, it appears that the assessee has nothing to say and has no objection regarding imposing the penalty us/ 271 (1) (c) of I. T. Act, 1961. Therefore, I impose a penalty of equal to 100% of tax sought to be evaded on account of the above acts of the assessee of Rs. 34,05,436/- i.e. 100% tax evaded. In the light of the above, we need to examine whether assessment order and the penalty order comply with the provisions of section 271 (1) (c) of the Act. We find that on page 3 of the assessment order, the assessing officer, A.O. observed as under:- “As the assessee has concealed/furnished the inaccurate particulars of income therefore, penalty u/s 271(1)(c) is also initiated.” 3.3 As per section 271(1)(c), the assessing officer is empowered to impose penalty if in the course of any proceedings under this Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income. From the above provision it is clear that there has to be a specific satisfaction by the Assessing officer that the assessee is guilty of concealing the particulars of his income or furnishing inaccurate particulars of such incomes. 3.4 From the above, it is clear that the assessing officer should give a specific finding. In the present case, in the assessment order as noted above the assessing officer has stated that the assessee has concealed / furnished the inaccurate particulars of income. Therefore, the penalty under Section 271 (1) (c) was also initiated from this it can not be inferred whether there is specific charge of concealing the particulars of income or furnished the inaccurate particulars of such income Law is well settled that the assessing officer has to come to a definite satisfaction whether the assessee has concealed the income of particulars or furnished the inaccurate particulars of income. The Hon'ble Karnataka High Court in the case of CIT and Another Vs. Manjunatha Cotton and Ginning Factory, 359 ITR 565 (Kar.) has held that the notice u/s 274 of the Act should specifically state as to whether penalty is being proposed for concealment of particulars of income or inaccurate particulars of income. In the present case notice under section 274 dated 25/3/2015 enclosed at paper book page 16 reads as under: - “Penalty Notice Under Section 274. Read with Section 271 of the IT Act, 1961. Printed from counselvise.com 14 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR Whereas in the course of proceedings before me for the Assessment Year 2012- 13. It appears to me that you have: - Read With Section 271(1)(c) concealed particulars of income or furnished inaccurate particulars of income.” Therefore, there is no specific charge by the Assessing officer. Further, it is noted that the Assessing officer in penalty order (as noted hereinabove) has proceeded on the basis of the assumption that the assessee is satisfied with the assessment order. Therefore, it appears that the assessee has nothing to say and has no objection regarding the imposing of the penalty under section 271 (1) (c) of the Act. In our considered view, the assessing officer was not justified in imposing the penalty on this basis the action of the assessing officer is contrary to the provision of law.” ii) Shankar Lal Khandelwal v. DCIT – ITA No. 878/JP/2003. iii) Radha Mohan Maheshwari v. DCIT – ITA No. 773/JP/2013. iv) Murari Lal Mittal ITA No. 334/JP/2015 order dated 09/11/16 v) Mrs Mradula Agarwal vs I.T.O. – ITA No. 176/JP/2016 Attention is drawn towards the recent judgement of the Hon'ble Jurisdictional High Court in the case of Shevata Construction Co. Pvt. Ltd. ITA No. 534/2008 (copy enclosed), wherein the Hon'ble High Court at Para 9 of its order held as under: - “…… Taking into consideration the decision of the Andhra Pradesh High Court which virtually considered the subsequent law and the law which was prevailing on the date the decision was rendered on 27.08.2012. In view of the observation made in the said judgement, we are of the opinion that the contention raised by the appellant is required to be accepted and in the finding of Assessing officer in the assessment order it is held that the A.O. has to give a notice as to whether he proposes to levy penalty for concealment of income or furnishing inaccurate particulars. He cannot have both the conditions and if it is so he has to say so in the notice and record a finding in the penalty order ….” (Emphasis Supplied). The other recent Judgements of Bombay High Court are as under:- Ganga Iron & Steel Trading Co Vs CIT (2022) 135 taxmann.com 244/286 Taxmann 21(Bom) Pr.CIT Vs. Jahangir H.C. Jahangir (2023) 155 taxmann.com 209 Printed from counselvise.com 15 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR Therefore, the concealment of income and furnishing inaccurate particulars of income, two are different defaults and they cannot be intermixed. Therefore, the order of Ld. A.O. deserves to be set aside and penalty levied by AO deserves to be cancelled. Ground No. (2) That without prejudice to the ground No. (1) above on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming penalty of Rs. 4,04,481/- imposed by the learned AO u/s 271(1)(c) of the IT Act, 1961. It is an undisputed fact that there is no difference in between return filed u/s 153A of the IT Act, 1961 assessed income after appeal u/s 250/154/153A/143(3) of the I T Act, 1961. In other words the return filed u/s 153A is finally accepted. The penalty proceedings u/s 271(1)(c) of the Act was initiated on the ground that appellant firm offered an income of Rs.13,09,000/- in the revise return filed in response to notice u/s 153A of the I T Act, 1961 which due to inadvertent mistake originally left to be included in the original return filed u/s 153A of the I T Act, 1961. The Ld. AO in the penalty order levied penalty of Rs.4,04,481/- on the additional income shown in return of income filed u/s 153A of the Ac). It is submitted that the explanation-1 to section 271 (1) (c) is not applicable as the amount was included suo moto in return u/s 153A to correct the finding of assessee. The CIT (A) – 4 on similar facts in case of KGK Creations P. Ltd vide dated 30-11-2015 in ITA No. 559/2013-14 it was held that when in the return filed in compliance to notice u/s 153A assessee suo moto corrected any mistake/wrong claim etc. in return filed u/s 139 (1) then explanation to section 271 (1) (c) are not applicable. Therefore when returned income u/s 153A is accepted there is no default u/s 271 (1) (c) and deleted the penalty u/s 271 (1) (c). The case is covered from this judgement. The appellant further relies on the following judicial pronouncements: \u0001 The Hon’ble ITAT, Jodhpur Bench, Jodhpur in the case of Poonam Marble Pvt. Ltd. Vs DCIT (2013) 40 Taxmann.Com 164 dated 03-06-2024 having identical facts of the case held that : A search operation was conducted at business and residential premises of assessee, various documents which were found and seized during course of search operation indicated that assessee had made unaccounted sales of Rs. 2,62,300 and had also made unrecorded sales of certain sum - Amount of said unaccounted sales was declared in revised return by assessee and assessment was completed - Assessing Officer however imposed penalty under section 271(1)(c) on such additions - Whether since additional income of Rs. 2,62,300 was disclosed by assessee in revised return Printed from counselvise.com 16 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR which was accepted by Assessing Officer in its entirety and other additions were made only on basis of estimated income by applying GP rate declared by assessee itself, penalty on said additional income was not leviable - Held, yes [Para 9] [In favour of assessee] \u0001 The Hon’ble Supreme Court in the case of CIT Vs Suresh Chand Mittal, 119 Taxmann 433 dated 26-07-2001 held that “The Tribunal held that the department had not discharged its burden of proving concealment and had simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith and that penalty could not be levied. On reference, the High Court upheld the Tribunal's findings. The facts of the case are that the assessee filed his returns. As a result of search, a notice under section 148 was served on him and pursuant thereto, he filed revised returns of income showing higher income. Eventually, the assessment orders were passed and the returns submitted were regularised under section 148. Meanwhile, the Assessing Officer levied penalty under section 271(1)(c) for concealment of income while rejecting the assessee’s contention that he had revised his returns suo motu and had offered additional income to buy peace of mind and to avoid litigation. On appeal, the Commissioner (Appeals) affirmed the order of the Assessing Officer. However, on further appeal, the Tribunal cancelled the penalty levied. On further appeal the Hon’ble Court held that “It is well-settled that under section 271(1)(c ), the initial burden lies on the revenue to establish that the assessee has concealed the income or has furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation which is found to be false by the assessing authority. However, the proviso to Explanation 1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide. In the instant case, though it was true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing Officer, but once the revised assessment was regularised by the revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the department and to come out of vexed litigation could be treated as bona fide. Therefore, the Tribunal was justified in cancelling the penalty levied. Printed from counselvise.com 17 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR \u0001 The Hon’ble Supreme Court in case of Dilip N. Shroff Vs. JCIT (2007) 291 ITR 519 held that before penalty can be levied u/s 271(1)(c) the entirety of circumstances must reasonably point to conclusion that assessee had consciously concealed his particulars of income or had furnished inaccurate particulars thereof. If there is no evidence or material to show that the assessee has deliberately furnished inaccurate particulars and there was any mala fide intention on his part so as to make him liable for penalty. \u0001 The Hon’ble Rajasthan High Court in CIT Vs. Krishi Tyre Retreating and Rubber Industries held if some inference drawn from some documents during survey, which the assessee was unable to explain to the satisfaction of A.O. , it do not justify penalty u/s 271(1)(c) of I.T. Act, 1961. \u0001 The Hon'ble Rajkot Tribunal in the case of Shabbir AllauddinLatiwala vs. DCIT [2011] 16 taxmann.com 177 (Rajkot) held as under: “when there was nothing placed on record which might even remotedly indicate about specific nature of additional income offered by assessee while furnishing returns in response to a notice issued under section 153A, and there was no direct or indirect linkage brought on record with reference to any of specific seized materials so as to establish charge for which penalty had been levied then penalty order should be set aside”. \u0001 The Hon'ble Mumbai Tribunal in the case of Virendra M. Shanklesha, Mumbai v. Assessee (ITA No. 6431 to 6433/Mum/2010) held as under: “5.3 It is clear from the record that the additional income admitted in the return filed u/s 153A is not because of some bogus or an absolutely wrong claim; but because of some error or omission in the return of income and in respect of the claim u/s 80L/80D/80CC of the I T Act which is in the nature of voluntary offer of the income by the assessee and would nto amount to concealment of income or furnishing of inaccurate particulars of income. Further, the AO has not discussed or …..…..given any finding that the addition was otherwise required to be made because of detection of income as found during the course of search and seizure action. Therefore, in the absence of any material or finding by the AO that the additional income admitted in the return of income filed u/s 153A is because of some incriminating material or information found during the course of search and seizure action. It can’t be said that the case of the assessee would attract the provisions of sec. 271 (1) (c). Accordingly, the additional income offered by the assessee is voluntary and based on the books of account and not because of any new material or facts came to the light during the search and seizure action. Printed from counselvise.com 18 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR 5.4 Therefore, in the facts and circumstances of the case, when the assessee has disclosed all the primary facts in the return of income filed u/s 139, then the additional income offered in the return filed u/s 153A because of some discrepancy and error would not amount to concealment of income or furnishing inaccurate particulars of income attracting levy of penalty u/s 271 (1) (c) of the I. T. Act. In view of the above discussion, we are of the considered opinion that the levy of penalty is not warranted and accordingly, the same is deleted.” \u0001 The Hon'ble Nagpur Tribunal in the case of DCIT v. PurtiSakharKarkhana [2013] 35 Taxmann.com 594 (Nagpur – Trib) held as under: “search assessments made under section 153A cannot be treated as continuance of normal assessment proceedings whether abated or not and, therefore, it will not be justified to refer to returned income under section 139 for purpose of imposition of penalty under section 271 (1) (c)….. …..where returned income filed under section 153A is accepted by Assessing officer and there is no variation in assessed income and returned income, penalty under section 271 (1) (c) cannot be imposed”. In view of above facts of the case penalty order is not sustainable in law and penalty of Rs. 4,04,481/- imposed by Ld. A.O. being wrong and bad in law which deserves to be deleted. Ground No. (3) That the appellant craves permission to add to or amend to any of grounds of appeal or to withdraw any of them. 5. To support the contention raised in the written the ld. AR of the assessee filed the following documents and case laws in support of the contention raised in the written submission. List of Documents filed S.N. Particulars of documents Page No. 1. Copy of Penalty Notice dated 16-01-2020 1 2. Copy of acknowledgement of ITR filed u/s 139(1) on 28-09- 2012 u/s 153A dated 8-06-2015 and revised return u/s 153A of the Act, 1961 dated 19-10-2015 2-4 Compilation of Judgements S.N. Name of cases/ Name of Court Date of order Page No. Printed from counselvise.com 19 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR statement 1. CIT vs Suresh Chandra Mittal Supreme Court of India 26-07-2001 1-2 2. CIT vs Suresh Chandra Mittal High Court of Madhya Pradesh 20-07-1999 3-4 3. Poonam Marble (P) Ltd vsd DCIT ITAT Jodhpur Bench 03-06-2013 5-9 4. Virendra M Shanklesha vs DCIT, CC-1, Thane ITAT Mumbai Bench 25-04-2012 10-15 5. Shabbir Allauddin Latiwala vs DCIT ITAT Rajkot Bench 23-09-2010 16-13 6. In addition, the ld. AR of the assessee submitted that the assessee filed the revised return of income before the completion of the assessment and thereby the charge of revenue that the assessee has concealed the particulars of income is not correct as the assessee has already filed the return of income and paid the tax due along with the interest and the ld. AO accepted that return of income. Having accepted that return there is no difference between the income finally assessed and returned by the assessee as revised. Based on that submission that the allegation of the revenue as to the levy of penalty fails and thereby the penalty confirmed by the ld. CIT(A) is required to be deleted. 7. Per Contra ld. DR supported the orders of the lower authorities and submitted that the assessee has in the original return of income had not provided correct information and revised return of income and Printed from counselvise.com 20 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR therefore, the assessee is liable for the penalty as per provision of section 271(1)(c) of the Act. 8. We have heard both the parties and perused the materials available on record. Vide Ground no 1 & 2 the assessee challenges the levy of penalty of Rs. 4,04,481/-. The brief facts related to the levy of this penalty is that the assessee there was an action of search and seizure action u/s 132(1) of the Act was carried out on 5-02-2015 in the case of Bundi Silica Group, Kota to which the assessee belongs. It is noted that the AO issued a notice u/s 153 of the Act to the assessee on 13-05-2015. In response to the notice, the assessee filed its return of income on 08-06-2015 for the Assessment Year 2012-13 declaring a total income at Rs.92,85,050/-. The assessee filed its revised return of income on 19-10-2015 for the assessment year 2012-13 declaring a total income at Rs.1,05,94,050/-. Thus, the AO completed the assessment u/s 143(3) r.w.s. 153A vide order dated 28-12-2016 at a total income of Rs.1,40,62,140/-. Further, the order u/s 154 of the Act was also made on 25-09-2017 and the income was assessed at Rs.1,61,76,089/- by making additions on account of disallowance of unabsorbed depreciation. Printed from counselvise.com 21 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR The assessee filed the appeal before the ld. CIT(A)-4, Jaipur which was disposed off vide order 04-04-2018 by the ld. CIT(A). After giving the effect of the above order, the assessed income was reduced to Rs.1,05,94,050/- which was as declared in the revised return of income filed on 19.10.2015. Since, there was change in the return of income originally filed and thereafter subsequently declared at higher amount by way of revised return of income ld. AO initiated the penalty proceedings u/s 271(1)(c) of the Act. As is evident from the record that the assessee has revised the return of income to include the income surrendered and the same was assessed as such finally. The ld. AO levied the penalty of Rs. 4,04,481/-on the additional income of Rs. 13,09,000/- disclosed by the assessee. Thus, the income finally assessed is same as per revised return of income filed and therefore, now the issue is required to be decided that in such a case penalty is leviable or not and the original return can be substituted with the revised return of income or not. The similar issue is decided by the Hon’ble Gujarat High Court in the case of PCIT Vs. Babubhai Ramanbhai Patel [ 84 taxmann.com 32 (Gujarat) ] wherein High Court observed that ; 4. Before us learned counsel for the revenue placed heavy reliance on the provisions contained in sub-section (3) of Section 139 to contend that an assessee who wishes to carry forward any loss must file a return under sub- Printed from counselvise.com 22 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR section (3) within the time permitted and only upon which the same would be treated as return under Section 139(1) of the Act. Counsel for the revenue submitted that when no return in terms of sub-section (3) of Section 139 claiming carry forward or set off loss was filed, such claim cannot be subject matter of a revised return. Had the assessee filed such return, the possibility of revising such return on finding any error would arise. 5. We may notice that under sub-section (1) of Section 139, every person whose income for the previous year exceeds the maximum amount not chargeable to tax, is required to file a return before the due date. Sub-section (3) of Section 139 provides that any person who has sustained a loss and claims that the loss should be carried forward would file a return of loss within the time prescribed under sub-section (1) and thereupon all the provisions of the Act shall apply as if it was a return under sub-section (1) of Section 139 of the Act. Under sub-section 4 of Section 139, a person who has not furnished a return within the time allowed under sub-section (1) may still furnish a return at any time before the end of the relevant assessment year or before the completion of the assessment whichever is earlier. Sub-section (5) of Section 139 provides that any person having furnished a return under sub-section (1) or sub-section (4) discovers any omission or a wrong statement therein, he may furnish a revised return any time before the expiry of one year from the end of relevant assessment year or before the completion of the assessment whichever is earlier. 6. Sub-section (5) of Section 139, therefore, gives right to an assessee who has furnished a return under sub-section (1) or sub-section (4) to revise such return on discovery of any omission or a wrong statement. Such revised return, however, can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. This is precisely what the assessee did while exercising the right to revise the return. Sub-section (5) of Section 139 does not envisage a situation whereupon revising the return if a case for loss arises which the assessee wishes to carry forward, the same would be impermissible. In terms, sub-section (5) of Section 139 allows the assessee to revise the return filed under sub- section (1) or sub-section (4) as long as the time frame provided therein is adhered to and the requirement of the revised return has arisen on discovery of any omission or a wrong statement in the return originally filed. Accepting the contention of the revenue would amount to limiting the scope of revising the return already filed by the assessee flowing from sub-section (5). No such language or intention flows from such provision. 6.1 The Allahabad High Court in case of Dhampur Sugar Mills Ltd. v. CIT [1973] 90 ITR 236, in the context of the Income Tax Act, 1922 held that the assessee is given a right to file a correct and complete return if he discovers an error or omission in the return filed earlier. The assessment can be completed only on the basis of the correct and complete return. The earlier return, after a revised return has been filed, cannot form the basis of assessment although it may be used to indicate the conduct of the assessee. There is a clear distinction between a Printed from counselvise.com 23 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR revised return and a correction of return. Once a revised return is filed, the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment. 7. The Madras High Court in the case of CIT v. Periyar District Co-operative Milk Producers Union Ltd. [2004] 266 ITR 705/137 Taxman 364 held that once the assessee had filed a return claiming carry forward loss under sub-section (3) of Section 139, a revised return could be filed in respect of such a return. We are conscious that we are not directly concerned with such a situation. 8. In view of the above discussion, we do not find any error in the view of the Appellate Tribunal. Tax appeal is, therefore, dismissed. As is evident from the above decision that once a revised return is filed, the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment. Now considering that ratio as held that the revised return filed was in substitution of the original return of income. Be that it may so in that situation penalty can be levied or not when the revised return of income and assessed income being same. The similar issue is decided by our jurisdictional High Court in the case of Commissioner of Income-tax, Udaipur v. Udaipur Central Cooperative Bank Ltd. [ 59 taxmann.com 471 (Rajasthan) ] wherein the Hon’ble High Court observed that ; The respondent assessee is carrying out business of banking and providing credit facility to its members. The assessee while filing return of income on 29.9.2008 declared no taxable income. A revised return was subsequently filed on 25.11.2009 showing taxable income of Rs.93,13,296/-. Suffice to mention that in the original return dated 29.9.2008 the assessee claimed deduction of Rs.93,13,296/- as per provisions of Section 80-P(2)(d) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961'). Printed from counselvise.com 24 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR 2. The Assessing Officer by a notice, as per provisions of Section 271(1)(c) of the Act of 1961, dated 5.12.2011 called upon the assessee respondent to explain as to why penalty be not imposed upon it for concealment of particulars of income for the assessment year 2008-09. 3. The assessee responded the notice with assertion that it disclosed full particulars of the income and did not conceal any particulars of income, as such no action as per Section 271(1)(c) of the Act of 1961 was desirable. 4. The Assessing Officer under the order of assessment dated 20.6.2012 imposed a penalty upon the assessee respondent. A challenge to the same was given by the assessee respondent by way of filing an appeal before the Commissioner of Income Tax (Appeals), Udaipur that came to be accepted vide the order dated 11.1.2011. Learned Commissioner of Income Tax (Appeals), Udaipur while cancelling the penalty arrived at the conclusion that the claim of deduction under Section 80-P(2)(d) of the Act of 1961 was not with any ulterior motive, hence a revised return was filed, as such, the action of the assessee does not fall in the category of concealment or furnishing inaccurate income. An appeal preferred by the revenue before the Income Tax Appellate Tribunal also came to be dismissed by judgment dated 21.1.2013. 5. Before us, the argument advanced by learned counsel for the revenue is that the Commissioner of Income Tax (Appeals), Udaipur as well as the Income Tax Appellate Tribunal failed to appreciate that the assessee at the first instance claimed deduction by concealing taxable income and the accurate taxable income was disclosed by a revised return, therefore, an effort was certainly made to furnish inaccurate details to conceal taxable income and that demands penalty. We do not find any merit in the argument advanced. 6. It is the position admitted that the respondent assessee by submitting a revised return declared complete and accurate taxable income. No information given in the revised return was found incorrect or inaccurate. No material is also available on record to establish that any conscious effort was made by the assessee respondent to conceal its income. To impose a penalty as per Section 271 (1)(c) the Assessing Officer is required to get himself satisfied about existence of the conditions stated therein. Hon'ble Supreme Court in CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 , while examining the issue as to what does concealment of particulars of income or submission of inaccurate particulars of income mean under Section 271(1) (c) of the Act of 1961, held as under:— 'A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The present is not a case of concealment of the income. That is not the case of the Revenue either. However, the learned counsel for Revenue suggested that by making Printed from counselvise.com 25 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word \"particular\" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word \"particulars\" used in the section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The learned counsel argued that \"submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income\". We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In CIT v. Atul Mohan Bindal [2009] 9 SCC 589, where this court was considering the same provision, the court observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This court referred to another decision of this court in Union of India v. Dharamendra Textile Processors [2008] 13 SCC 369 as also, the decision in Union of India v. Rajasthan Spg. & Wvg. Mills [2009] 13 SCC 448 and reiterated in paragraph 13 that: \"13. It goes without saying that for applicability of section 271(1)(c), conditions stated therein must exist.\" Therefore, it is obvious that it must be shown that the conditions under section 271(1)(c) must exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. In Dilip N. Shroff v. Joint CIT [2007] 6 SCC 329, this court explained the terms \"concealment of income\" and \"furnishing inaccurate particulars\". The court went on to hold therein that in order to attract the penalty under section 271(1)(c), mens rea was necessary, as according to the court, the word \"inaccurate\" signified a deliberate act or omission on behalf of the assessee. It went on to hold that clause (iii) of section 271(1)(c) provided for a discretionary jurisdiction upon the assessing authority, inasmuch as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment of particulars of income, but it may not exceed three times thereof. It was pointed out that the term \"inaccurate particulars\" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the Assessing Officer must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then Printed from counselvise.com 26 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff v. Joint CIT was upset. In Union of India v. Dharamendra Textile Processors, after quoting from section 271 extensively and also considering section 271(1) (c), the court came to the conclusion that since section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while filing return, there was no necessity of mens rea. The court went on to hold that the objective behind the enactment of section 271(1)(c) read with Explanations indicated with the said section was for providing remedy for loss of revenue and such a penalty was a civil liability and, therefore, wilful concealment is not an essential ingredient for attracting civil liability as was the case in the matter of prosecution under section 276C of the Act. The basic reason why decision in Dilip N. Shroff v. Joint CIT was overruled by this court in Union of India v. Dharamendra Textile Processors, was that according to this court the effect and difference between section 271(1)(c) and section 276C of the Act was lost sight of in the case of Dilip N. Shroff v. Joint CIT However, it must be pointed out that in Union of India v. Dharamendra Textile Processors, no fault was found with the reasoning in the decision in Dilip N. Shroff v. Joint CIT, where the court explained the meaning of the terms \"conceal\" and \"inaccurate\". It was only the ultimate inference in Dilip N. Shroff v. Joint CIT to the effect that mens rea was an essential ingredient for the penalty under section 271(1) (c) that the decision in Dilip N. Shroff v. Joint CIT was overruled. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word \"inaccurate\" has been defined as: \"not accurate, not exact or correct; not according to truth; erroneous; as an inaccurate statement, copy or transcript.\" We have already seen the meaning of the word \"particulars\" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars.' 7. In the case in hand the applicant submitted the revised return and on basis of that tax was recovered. True it is, at the fist instance the assessee claimed exemption as per provisions of Section 80-P(2)(d) of the Act of 1961 but immediately on knowing about its non-applicability a revised return was filed Printed from counselvise.com 27 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR disclosing accurate income. Under Section 271(1)(c) of the Act of 1961 it is required to be seen as to whether the assessee has concealed the income or the details supplied by him in return were found incorrect, erroneous, not accurate, not according to the truth or not exact depiction of the taxable income. No such eventuality in the instant matter exists. The Commissioner of Income Tax as well as the Income Tax Appellate Tribunal after examining the entire record arrived at the conclusion that first return submitted by assessee Udaipur Central Cooperative Bank Ltd. was a bonafide error and that was immediately rectified by submitting a revised return. 8. In this factual background we do not find any substantial question of law that may demand adjudication by us by entertaining an appeal as per provisions of Section 260-A of the Income Tax Act, 1961. 9. The appeal is dismissed accordingly. Respectfully, following the finding of our Hon’ble High Court that once the assessee files the revised return of income and thereby the revenue recovered the tax and since there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. The bench also noted from the submission of the case law as filed that while relying on the case of Commissioner of Income Tax Vs. Suresh Chandra Mittal 119 Taxman 433(SC) wherein Hon’ble Apex Court has confirmed the view of Hon’ble Madhya Pradesh High Court [ 123 TAXMAN 1052 (MP) ] while dealing with that case that ; 6. In the present case, though it is true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing Officer, but once the revised assessment was regularised by the revenue and Printed from counselvise.com 28 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore, the Tribunal was justified in cancelling the penalty levied by the Assessing Officer and affirmed by the Commissioner (Appeals) in the facts and circumstances of the case. This reference is, accordingly, answered in the affirmative holding that the Tribunal was justified in doing so. Thus, as is evident from the above observation that once the revised assessment was regularized by the revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation was accepted there is no case of providing any accurate particulars of income or concealing the particulars of income. Based on these observations, ground no. 1 & 2 raised by the assessee are allowed. Ground no. 3 being general does not require our finding. In the result the appeal of the assessee in ITA no. 1453/JP/2024 stands allowed. 9. Now we take up the appeal of the assessee in ITA no. 1454/JP/2024. In this appeal the assessee has taken the following grounds of appeal; 1. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in not accepting the plea of the appellant that the proceedings initiated by the ld. AO for imposition of penalty u/s 271(1)(c) Printed from counselvise.com 29 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR of the IT Act, 1961 and consequent penalty of Rs 279985 imposed by him is wrong and bad in law. 2. That without prejudice to the ground No. (1) above on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming penalty of Rs. 2,79,985/- imposed by the learned AO u/s 271(1)(c) of the IT Act, 1961. 3. That the appellant craves permission to add to or amend to any of grounds of appeal or to withdraw any of them. 10. The brief facts related to the levy of this penalty are that in the case of the assessee as noticed above, there was an action of search and seizure action u/s 132(1) of the Act was carried out on 5-02-2015 in the case of Bundi Silica Group, Kota to which the assessee belongs. It is noted that the AO issued a notice u/s 153A of the Act to the assessee on 13-05-2015. In response to the notice, the assessee filed its return of income on 08-06-2015 for the Assessment Year 2014-15 declaring a total income at Rs.16,12,000/-. Records also reveal that the assessee on 26.09.2014 e-filed the original return of income declaring income as Rs. 7,05,900/- which was revised i.e. on 19.03.2015 after the search, wherein the income of Rs. 16,12,000/- was declared by the assessee. Since the assessee filed the revised return of income after the date of search the ld. AO initiated penalty u/s. 271(1)(c) of the Act. In the course of assessment proceeding against the returned income of Rs. 16,12,000/- ld. AO determined the total income at Rs. 27,62,170/-. The assessee challenged Printed from counselvise.com 30 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR that order of the assessment before ld. CIT(A) who disposed that appeal by an order dated 04.05.2018 and thereby directed to delete the addition made by the ld. AO and thereby the returned income at Rs. 16,12,000/- was considered by ld. CIT(A). As noticed above, there was change in the return of income originally filed and thereafter subsequently declared at higher amount by way of revised return of income, ld. AO initiated the penalty proceedings u/s 271(1)(c) of the Act. As is evident from the record the assessee has revised the return of income to correct the claim u/s. 40(b) of the Act. Thus, the income finally assessed remained same as shown in the revised return of income. Therefore, now the issue required to be decided in as to whether in such a case penalty is leviable or not and the original return can be substituted with revised return of income or not especially when assessment order has not yet been passed. This issue being similar to the facts of the assessee in ITA no. 1453/JP/2024 for Assessment Year 2012-13, wherein the bench after hearing both the parties and perusing the materials available on record has accepted the plea that when the returned income and assessed income remains same, penalty cannot be levied u/s. 271(1)(c) of Printed from counselvise.com 31 ITA NO. 1453 & 1454/JPR/2024 KANHAIYALAL RAMESHWAR DAS VS ACIT, CENTRAL CIRCLE3, JAIPUR the Act and thereby that appeal of the assessee has been allowed. Thus, it is also noteworthy to mention that issue for the assessment year 2014-15 being similar to the assessment year 2012-13, the findings recorded and decision taken by us qua assessment year 2012-13 shall also apply mutatis mutandis to the case of the assessee for the A.Y 2014-15. Hence, this appeal of the assessee ITA no. 1454/JP/2024 is also allowed. Order pronounced in the Open Court on 08/10/2025. Sd/- Sd/- ¼ ujsUnz dqekj ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Narender Kumar) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 08/10/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Kanhaiyalal Rameshward Das, Kota 2. izR;FkhZ@ The Respondent- The ACIT, Central Circle-3, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZ QkbZy@ Guard File ITA No. 1453 & 1454/JPR/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar Printed from counselvise.com "