SHANKAR LAL LUDHANI THROUGH LATA DEVI LUDHANI AS LEGAL HEIR,AJMER V. DCIT, CENTRAL CIRCLE, AJMER, AJMER

ITA 406/JPR/2025

AI Insights

The case involves Shankar Lal Ludhani, who, during a survey under section 133A of the Income Tax Act, 1961, surrendered an undisclosed income of Rs. 27,00,000. This income was included in the revised return filed for the assessment year 2017-18, and tax was paid under section 115BBE. The Assessing Officer initiated penalty proceedings under section 271AAC(1) due to the tax payment being made after the end of the relevant financial year. The Tribunal, however, found that the penalty was not justified as the assessee had adhered to the statutory requirements by including the surrendered income in the return and paying the tax within the financial year when the survey was conducted.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706018 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2017-2018
• Other Referred Cases: Melekandy Puthalath Farook vs ACIT, PCIT-1 vs. Babubhai Ramanbhai Patel, Dhampur Sugar Mills Ltd. vs. CIT, CIT vs. Periyar District Co-operative Milk Producers Union Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAUTAM SINGH CHOUDHARY
• Assessee Lawyers: SUDHIR SOGANI
• Keywords: Speculation loss; Revised return; Initiation of penalty proceedings; Liquidation
• Section: 147; 148; 143(3); 68; 69; 69C; 139; 6; 133A; 139(5)

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 Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 406/JP/2025 fu/kZkj.k o\"kZ@Assessment Year : 2017-18 Shankar Lal Ludhani through Late Devi Ludhani As Legal Heir Shop No. 5, Opp. Plaza Cinema Parao, Ajmer 305001 cuke Vs. DCIT, Central Circle, Ajmer LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAFPL 1281 M vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Sudhir Sogani, CA jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 23/06/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 04/07/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM The present appeal is because the assessee dissatisfied with the order of the Commissioner of Income Tax (Appeals), Jaipur - 05 [here in after ld. CIT(A) ] dated 03/03/2025 for assessment year 2017-18. The said order of the ld. CIT(A) arise as against the penalty order dated 28.03.2022 passed under section 271AAC(1) of the Income Tax Act, by DCIT, Central Circle, Ajmer. 2 ITA No. 406/JP/2025 Shankar Lal Ludhani 2. In this appeal, the assessee has raised following grounds: - 1. Under the facts and circumstances of the case the learned CIT(Appeals) is not justified in sustaining the penalty levied under section 271AAC(1) of the Act, 1961. 3. Succinctly, the fact as culled out from the records is that assessee derives income from Trading of BIRIS & MATCHES on wholesale basis. In this case, it was found that during the demonetization period, the assessee had deposited cash of Rs. 2,07,20,000/- in the bank account of M/s Vaishali Enterprises. Accordingly, a survey u/s 133A was carried out at the business premises of the assessee wherein it was found that the assessee had made cash sales on 08.11.2016 abnormally. However, the assessee couldn't furnish the explanation and sources of cash deposits to the extent of Rs. 27,00,000/-. Therefore, the assessee surrendered an amount of Rs. 27,00,000/- for taxation for A.Y 2017-18 and paid taxes thereupon u/s 115BBE of the IT Act, 1961. 3.1 Record reveals that assessee filed the return of income on 06.09.2017 declaring total income at Rs. 15,30,170/-. Subsequently, the assessee revised his Return of Income on 27.02.2018 declaring total income of Rs. 42,30,170/-, in which the undisclosed income surrendered during the course of survey u/s 133A of the Income Tax Act, 1961 of Rs. 3 ITA No. 406/JP/2025 Shankar Lal Ludhani 27,00,000/- was also included. Assessment proceedings u/s 147 r.w.s. 143(3) of the IT Act, 1961 were completed and order passed on 27.05.2021 by assessing the total income at Rs.42,30,170/- as against the income declared in response to notice issued u/s 148 of the IT Act, 1961. Since the assessee paid the taxes u/s 115BBE of the IT Act, 1961 on the undisclosed income detected during the course of survey, were paid after the end of the relevant previous year therefore, penalty proceedings u/s 271AAC of the Act were initiated separately vide notice dated 27.05.2021. 3.2 In the penalty proceedings, the assessee has argued that provisions of the penalty are applicable from A.Y.2018-19 onwards. This argument was not considered. The provisions of section 271AAC(1) were introduced vide Finance Act, 2016, hence applicable for this A.Y. i.e. A.Y.2017-18. The assessee has also argued that \"It may kindly be observed that the survey was conducted on 12.02.2018, Revised Return of income was filed on 27.02.2018, tax under section 115BBE was deposited on 23.02.2018. All these actions were taken during a space of 15 days, that is, within the financial year when survey was conducted.\" This argument of the assessee was also not considered as tenable and thereby ld. AO held that since taxes were paid on 23.02.2018 i.e. after end of relevant F.Y. i.e. 4 ITA No. 406/JP/2025 Shankar Lal Ludhani (01.04.2016 to 31.03.2017). Benefit's available if taxes are paid u/s 115BBE before the end of relevant previous year. The argument that the assessee surrendered the amount during survey with the understanding that no adverse action shall be taken against him and no penal proceedings shall be initiated against him. This was the understanding between the assessee and the department was also not considered as tenable since no such power to waive penalty is available in the Act to the assessing officer. In view of that fact ld. AO held that, the assessee has committed a default within the meaning and purview of section 271AAC(1) of the Act and as such liable to be penalized accordingly. Therefore, penalty @10% of the tax payable u/s 115BBE(1) of the I.T. Act, 1961 should be imposed on the assessee. Accordingly, penalty u/s 271AAC(1) of the Act of Rs.1,62,000/- being the 10% of the tax payable u/s 115BBE(1) of the I.T. Act, 1961 (i.e. Rs. 16,20,000/-) on the undisclosed income (surrendered during the course of survey and shown in the revised return and also in the return of income filed in response to notice u/s 148 of the I.T. Act, 1961) of Rs.27,00,000/-, was levied keeping in view of the default committed by the assessee. 5 ITA No. 406/JP/2025 Shankar Lal Ludhani 4. Aggrieved from the order of ld. CIT(A), assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: 4.2. Decision: In the present case, a penalty under Section 271AAC(1) of the Income-Tax Act, 1961 has been levied. The relevant provisions of the section state: Section 271AAC(1): The Assessing Officer or the Joint Commissioner (Appeals) or the Commissioner (Appeals) may, notwithstanding anything contained in this Act other than the provisions of Section 271AAB, direct that, in a case where the income determined includes any income referred to in Section 68, Section 69, Section 69A, Section 69B, Section 69C, or Section 69D for any previous year, the assessee shall pay by way of penalty, in addition to tax payable under Section 115BBE, a sum computed at the rate of ten percent of the tax payable under clause (i) of sub-section (1) of Section 115BBE The case under consideration pertains to the assessment of an assessee engaged in the trading of biris and matches on a wholesale basis. The Assessing Officer (AO) found that during the demonetization period, the assessee had deposited cash amounting to Rs.2,07,20,000/- in the bank account of M/s Vaishali Enterprises. Upon conducting a survey under Section 133A, it was discovered that the assessee had made abnormal cash sales on 08.11.2016 However, the assessee failed to provide a satisfactory explanation regarding the source of cash deposits amounting to Rs 27,00,000/-. As a result, the assessee voluntarily surrendered Rs.27,00,000/- for taxation for A.Y. 2017-18 and paid taxes under Section 115BBE of the Income-Tax Act, 1961. The AO noted in the assessment order that the taxes under Section 115BBE were paid after the end of the relevant previous year, leading to the initiation of penalty proceedings under Section 271AAC(1). This observation forms the crux of the present dispute, where the assessee contests the validity of the penalty on the grounds that no specific addition has been made in the assessment order under Sections 68, 69, 69A, 698, 69C, or 69D. However, it is essential to consider the broader legal implications of Section 271AAC(1) and its interplay with Section 115BBE 6 ITA No. 406/JP/2025 Shankar Lal Ludhani Section 115BBE(1) imposes a higher tax rate on income falling under Sections 68 to 69D, ensuring that unexplained income or investments are taxed at a flat rate of 60% (before surcharge and cess). The fact that the assessee himself opted to pay tax under Section 115BBE indicates an implicit acknowledgment that the surrendered income falls under the ambit of unexplained income as per Sections 68 to 69D. The assessee's argument that no specific addition has been made under Sections 68 to 69D in the assessment order does not hold merit. When an assessee voluntanly pays tax under Section 115BBE, it is inferred that the income is being classified as unexplained. Therefore, the applicability of Section 271AAC(1), which imposes a penalty on such income, becomes a natural consequence. The Assessing Officer has further justified the penalty on the grounds that the tax under Section 115BBE was not paid within the relevant financial year, reinforcing the applicability of the penalty provisions under Section 271AAC(1). Furthermore, the AO's assessment order explicitly states that the assessee failed to provide an explanation for the source of cash deposits amounting to Rs.27,00,000/-which led to the surrender of income during the survey proceedings. This directly aligns with the intent of Section 271AAC(1), which targets cases where unexplained income is determined and added to the total income. Legal precedents have also supported the view that penalty under Section 271AAC(1) is valid even in cases where the assessee voluntarily surrenders income and pays tax under Section 115BBE. The mere absence of a formal mention of Section 68 to 69D in the assessment order does not absolve the assessee from penalty liability under Section 271AAC(1) if the nature of the income falls within its scope. In other words, the acceptance of higher tax liability under Section 115BBE serves as an implicit admission that the surrendered income is unexplained and falls under the categories listed in Section 271AAC(1). Additionally, the assessee's contention that no adverse action should be taken based on an oral understanding with the survey authorities holds no legal standing. The law mandates that unexplained income be assessed and penalized under the relevant provisions. Even if the assessee surrendered the income to avoid litigation, it does not override statutory provisions governing penalty proceedings. 7 ITA No. 406/JP/2025 Shankar Lal Ludhani The department's position is further strengthened by the AO's specific finding that the tax under Section 115BBE was paid after the relevant financial year, thereby breaching the conditions required for exemption from penalty under the proviso to Section 271AAC(1). The proviso clearly states that no penalty shall be levied if the assessee includes the unexplained income in the return filed under Section 139 and pays the tax before the end of the relevant previous year. However, in this case the taxes were deposited u/s 115BBE on 23.02.2018, i.e, after the end of the relevant FY 2016-17(01.04.2016 to 31.03.2017), so again this contention of the assesse also does not hold any merit. Since the assessee failed to meet this condition, the penalty under Section 271AAC(1) is legally justified. Given these facts, the penalty levied under Section 271AAC(1) is legally sustainable, and the assessee's appeal lacks merit. The argument that no explicit addition was made in the assessment order does not absolve the liability, as the payment under Section 115BBE itself is evidence of the nature of the income. Thus, the grounds of appeal are dismissed, and the penalty stands confirmed as per the provisions of Section 271AAC(1) of the Income-Tax Act, 1961. 5. In the result, the appeal is treated as dismissed. 5. As the assessee did not find any favour, from the appeal filed before the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the ground raised by the assessee, ld. AR of the assessee, has filed the written submissions which reads as follows : “The assessee is in appeal before your honour against the order of the Learned. Assessing Officer, Central Circle, Ajmer under section 271 AAC (1) of the IT Act, 1961 dated 28.03.2022 levying a penalty of Rs. 1,62,000.00. The brief facts of the case are as under: A survey under section 133A of the IT Act, 1961 was carried out on the assessee's business premises on 12.02.2018. During the survey proceedings the assessee surrendered an amount of Rs. 27,00,000.00 (Rupees Twenty Seven Lakhs) for taxation. 8 ITA No. 406/JP/2025 Shankar Lal Ludhani The assessee filed the Original Return of Income on 06.09.2017 declaring total income of Rs. 15,30,170.00 which was subsequently revised on 27.02.2028 declaring total income of Rs 42,30,170.00 which included the surrendered income of Rs.27,00,000.00 in response to notice u/s 148 of the IT Act, 1961 the assessee filed Return of Income on 07.11.2019 declaring income of Rs. 42,30,170.00. Due tax as per provisions of section 115BBE was paid by the assessee before filing the revised Return of income. At this juncture would like to draw your honours kind attention to section 271 AAC (1) which reads as under: 271AAC: (1) The Assessing Officer or {the Joint Commissioner (Appeals or the Commissioner (Appeals) may, notwithstanding anything contained in this Act other than the provisions of section 271AAB, direct that, in a case where the income determined includes any income referred to in section 68, section 69, section 69A, section 698, section 69C or section 69D for any previous year, the assessee shall pay by way of penalty, in addition to tax payable under section 11588, a sum computed at the rate of ten per dent of the tax payable under clause(i) of sub-section (1) of section 1158BE” From a plane reading of section 271 AAC (1) (supra), it is apparently clear that penalty under this section 271 AAC (1) can be levied only if any addition under section 68, 69 section 69A, section 69B, section 69C or section 69D is made to the income of the assessee. We invite your kind attention to the Assessment Order dated 27.05.2021 (copy of order enclosed for ready reference) from wherein it shall be observed that no addition to the income of the assessee has been made under any of the sections mentioned in section 271 AAC (1) of the IT Act, 1961. In view of this fact the issue of penalty notice under section 271 AAC (1) and subsequent levy of penalty is ab initio bad in law and facts. On this aspect the Learned Assessing Officer has opined that the assessee having paid tax under section 115BBE of the IT Act, 1961 surmounts to the assessee having consented for addition under the provisions. This view of the Learned Assessing Officer is untenable and devoid of any reasoning. So to say it is ridiculous. Even for a moment if we consider the Learned Assessing Officer's View, then to it has to be specified under which this so called addition has been made, that is to say, whether the addition has been made under section 68 or under section 69 or under section 69A or under section 698 or under section 69C or under section 69D. From a plane reading of the Assessment Order it can be observed that nowhere in the Assessment Order there is mentioning that the addition has been made under which section. It is established position of law that imposing penalty without specifying the specific charge is invalid. Reliance in the 9 ITA No. 406/JP/2025 Shankar Lal Ludhani regard is placed on the decision of ITAT CHENNAI BENCH in the case of MELEKANDY PUTHALATH FAROOK VS ACIT in Appeal No 1890/CHNY/2024 where the Honourable ITAT has observed that The order of penalty should specify under which limb of the section penalty is being levied. (Copy of order is enclosed for ready reference). Now coming on merits we have to state as under We invite your honours kind attention to the provision of section 271AAC(1) of the IT Act. 1961 which reads as under: Provided that no penalty shall be levied in respect of income referred to in section 68, section 65. section 69A, section 698, section 690 or section 690 to the extent such income has been included by the assessee in the return of income furnished under section 139 and the tax in accordance with the provisions of clause (i) of sub section (1) of section 11588E has been paid on or before the end of the relevant previous year It may kindly be observed that survey on the assessee was conducted on 12.02.2018 wherein the assessee surrendered income of Rs 27,00,000.00 for taxation. He filed Revised Return of income which included this surrendered income of Rs. 27,00,000.00 on 27.02.2018 under section 139 of the IT Act, 1961 and paid due tax amounting to Rs. 23,16,110.00 on 23.02.2018 under section 115BBE of the IT Act. 1961 It may kindly be observed that the survey was conducted on 12.02.2018, Reed Return of income was filed on 27.02.2018, tax under section 11588E was deposited on 23.02.2018 All these actions were taken during a space of 15 days, that is, within the financial year when survey was conducted On this aspect the Learned Assessing Officer has opined and concluded that as the tax has not been paid within the Financial Year 2016-17, these provisions are not applicable in the present circumstances. While coming to this conclusion the Learned Assessing Officer has overlooked the fact that when the survey was conducted on 12.02.2018 and amount surrendered was considered during the Financial year 2017-18, how could the tax be deposited in Financial Year 2016- 17. It may kindly be kept in view that statement of the assessee was recorded aunng the survey proceedings. We draw your kind attention to Question 11 of the statement recorded during the survey proceedings wherein the assessee in reply to the query as to deposit of SBN notes clarified that out of the sale proceeds of Rs. 53,02,750.00 recorded on 08.11.2016, a sum of Rs 27,00,000.00 wat the 10 ITA No. 406/JP/2025 Shankar Lal Ludhani assessee's undisclosed income which he is surrendering to be taxed in Assessment Year 2017-18 The Survey Authorities agreed to this view and asked the assessee to pay the due tax and file revised Return of Income for Assessment Year 2017-18 which the assessee duly complied with it may kindly be observed that in recorded statement the assessee also stated that he is surrendering this income to buy peace and avoid litigation with the hope that no penal proceedings will be initiated and levied. To which the Survey Authorities consented to. (Copy of recorded Statement of the assessee is enclosed for ready reference). It is submitted that normally surrendered income is taxed in the year of survey which was not adhered to in this case. The department asked the assessee to consider this surrendered income in Assessment Year 2017-18, as the amount was deposited in bank in this year to which the assessee complied with If any error has been committed it is at the hands of the Department for which the assessee cannot be put at fault. Sir, it is my humble submission that the intent of the provisions of section 11586E and 271AAC (1) should be appreciated with wide spectrum and one should not get stuck to the language of the provisions. As per section 115BBE on any income surrendered for taxation, the tax on the same should be paid during the Financial year in which the income has been surrendered The assesse having adhered to this, he is not at fault if the department has asked him to consider the surrendered income in assessment Year 2017-18 rather than Assessment Year 2018-19. Under these circumstances broader and liberal view of the term relevant previous year should be contemplated. The assessee has complied with all the provisions within the specified time, benefit of the provisions enumerated above (supra) should be given to the assessee. Furthermore, we invite your kind attention to the statement of the assessee recorded at the time of survey wherein in reply to Q 11, the assessee replied that he is surrendering this amount of Rs. 27,00,000.00 for taxation in this year with the express understanding that no adverse action shall be taken against him and no penal proceedings shall be initiated against him. This was the understanding between the assessee and the department. It is expected of the Department to keep up to their words and commitment and no penal action should have been taken. In view of the above facts and position of law, it is prayed that the levy of penalty may kindly be deleted. 11 ITA No. 406/JP/2025 Shankar Lal Ludhani 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: S. No. Contents Pages 1 Submission before CIT(A) dated 26.12.2024 1-4 2 Assessment order u/s 147 dated 27.05.2021 5-7 3 Penalty notice u/s 271AAC(1) dated 27.05.2021 8-8 7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee has filed the revised return in accordance with law within 15 days of the date of survey has also complied with the admission of income as per the statement of recorded during the course of survey. Considering the provisions of section 271AAC(1) of the Act the penalty cannot be levied as the assessee has paid the tax in the previous year wherein the survey took place and therefore, the penalty cannot be levied. Alternatively, ld. AR of the assessee argued that the ld. AO while issuing the notice did not specified the section or limb or for which he wanted to levy penalty in the case of the assessee and even on that part no payment can be levied. 8. Per contra, the ld. DR relied on the orders of ld. CIT(A) wherein the ld. CIT(A) has dealt with all the contentions as raised by the ld. AR of the 12 ITA No. 406/JP/2025 Shankar Lal Ludhani assessee. Since the payment of taxes made by the assessee are not in the previous year but in the year the survey took place and the assessee filed revised return wherein that income has been disclosed and therefore, penalty u/s 271AAC(1) of the Act is correctly levied. 9. We have heard the rival contentions and perused the material placed on record. Vide solitary ground raised in this appeal the assessee challenging the action of the ld. CIT(A) in sustaining the penalty levied under section 271AAC(1) of the Act. The brief facts related to the issue on hand are that the return of income for the year under consideration was filed by the assessee on 06.09.2017 declaring total income at Rs. 15,30,170/-. On account of the survey carried out the assessee surrendered the income of Rs. 27,00,000/- and thereby they have revised Return of Income on 27.02.2018 declaring total income of Rs. 42,30,170/-, in which the undisclosed income surrendered was included. Thereafter, assessment proceedings u/s 147 r.w.s. 143(3) of the Act were completed and order was passed on 27.05.2021 by assessing the total income at Rs. 42,30,170/- which was declared in the revised return. Since the assessee paid the taxes u/s 115BBE of the IT Act, 1961 on the 13 ITA No. 406/JP/2025 Shankar Lal Ludhani undisclosed income detected during the course of survey and since the same was paid after the end of the relevant previous year therefore, penalty proceedings u/s 271AAC of the Act were initiated separately vide notice dated 27.05.2021 and accordingly as per the detailed discussion made in the order it was levied for an amount of Rs. 1,62,000/-. Since the issue relates to the levy of penalty it would appropriate to deal with the provision of the said section i.e. 271AAC which reads as follows: Penalty in respect of certain income. 271AAC. (1) The Assessing Officer or 8-9[the Joint Commissioner (Appeals) or] the Commissioner (Appeals) may, notwithstanding anything contained in this Act other than the provisions of section 271AAB, direct that, in a case where the income determined includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D for any previous year, the assessee shall pay by way of penalty, in addition to tax payable under section 115BBE, a sum computed at the rate of ten per cent of the tax payable under clause (i) of sub- section (1) of section 115BBE: Provided that no penalty shall be levied in respect of income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D to the extent such income has been included by the assessee in the return of income furnished under section 139 and the tax in accordance with the provisions of clause (i) of sub-section (1) of section 115BBE has been paid on or before the end of the relevant previous year. (2) No penalty under the provisions of section 270A shall be imposed upon the assessee in respect of the income referred to in sub-section (1). (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section. As is evident from the vanilla reading of the provision the proviso deals that the return of income should be furnished under section 139 and the tax in accordance with the provisions of clause (i) of sub-section (1) of section 14 ITA No. 406/JP/2025 Shankar Lal Ludhani 115BBE has been paid on or before the end of the relevant previous year. Since the provision also deals with the provision of section 115BBE of the Act the same is also required to be examined and the same reads as follows: Tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D. 115BBE. (1) Where the total income of an assessee,— (a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of— (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) and clause (b) of sub-section (1). Upon co joint reading of both the provision of the Act we note that both the section deal with the section 139 and it does not speak any sub- section on that section 139. Thus, relying on the decision of the Gujarat High Court in the case of PCIT-1 Vs. Babubhai Ramanbhai Patel 84 taxmann.com 32 (Gujarat) wherein the court deal that the revised return 15 ITA No. 406/JP/2025 Shankar Lal Ludhani and original return of income. The relevant finding of the High Court reads as follows : This appeal is filed by the revenue challenging the judgement of the Income Tax Appellate Tribunal dated 29.08.2016. Following two questions are presented for our consideration: \"(A) Whether the Appellate Tribunal was right in deleting Rs.78,89,218/- out of addition of Rs.1,91,12,030/- made by the Assessing Officer in respect of disallowance of interest expense? (B) Whether the Appellate Tribunal has not erred in in facts and circumstances in deleting the addition of Rs.69,96,450/- made by the Assessing Officer by disallowing set off of speculation loss (F & O) as the same was not claimed in the original return but claimed in revised return where the case attracts the provisions of Section 139(3) of the Act?\" 2. So far as question no. [A] is concerned, by a separate order passed in case of this very assessee in Tax Appeal No. 492 of 2017, we have refused to interfere. Our reasons are as under:— \"3. With respect to this question, we notice that the CIT (A) confirms with the Assessing Officer that interest expenditure of Rs. 1.11 crores had to be disallowed. However, the Tribunal noted that the advances were made by the assessee to one Kanak Castor Products Private Limited. Kanak Castor was declared as the highest bidder for purchase of assets of a company in liquidation by the Gujarat High Court. To facilitate the purchase, the assessee had also purchased 4.79 crores shares out of 500 crores shares of the company i.e. Kanak Castor. The Tribunal, therefore, found that such advances were made for the purpose of business. We do not find any error in the view of the Tribunal. This question is, therefore, not considered.\" Without recording separate reasons, this question is not considered. 3. So far as question no. [B] is concerned, brief facts are that for the assessment year 2005-06, the assessee filed the return of income on 30.10.2005 under Section 139(1) of the Act declaring total income of Rs.53,24,330/-. In such return, the assessee did not claim speculation loss of Rs. 69,93,450/-. Such return was, however, revised under Section 139(5) on 29.11.2006. The Assessing Officer disallowed the carry forward of the speculation loss on the ground that the same was not claimed in the original return but in 16 ITA No. 406/JP/2025 Shankar Lal Ludhani the revised return. The CIT (A) as well as the Tribunal ruled in favour of the assessee. In particular, the Tribunal was of the view that once a return was revised under Section 139(5) of the Act, the original return filed under Section 139(1) would not survive. It was found that the revised return was filed within the time prescribed. The Tribunal did not accept the Assessing Officer's view that the revised return should be treated as non-est. 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-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- 17 ITA No. 406/JP/2025 Shankar Lal Ludhani 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 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 it is evident from the above judgment wherein the Hon’ble Gujarat High Court held that “There is a clear distinction between a 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.” Considering that aspect and the fact of the present case that the assessee has revised the return and the same has been accepted considering it as per provision of section 139 of the Act and 18 ITA No. 406/JP/2025 Shankar Lal Ludhani considering the provisions of the section 271AAC and 115BBE of the Act we see no reason to sustain the penalty and therefore, the same is directed to be deleted. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 04/07/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 04/07/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shankar Lal Ludhani through late Devi Ludhani as Legal Heir, Ajmer 2. izR;FkhZ@ The Respondent- DCIT, Central Circle, Ajmer 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 406/JP/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "