TMI Blog2004 (7) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income filed on22nd Oct., 2002, for asst. yr. 2002-03, the assessee declared an income of Rs. 5,41,814. The computation of income is placed at page No. 2 of the assessee s paper book. The same reads as follows: "Profits and gains from business or profession Net profit as per P L a/c 5,46,126 Add : Items disallowed/dealt separately depreciation as per Companies Act 2,18,251 7,64,377 Less : Depreciation as per IT Act (As per annexure attached) 2,22,563 Gross total income 5,41,814 Less : Deductions under Chapter VI-A Nil 5,41,814 4. On26th March, 2003, the AO issued a notice under s. 143(2) of the Act along with a questionnaire. In the said notice, the AO called upon the assessee to explain as to why the income surrendered in the course of survey has not been offered for taxation. Immediately on the receipt of the said notice under s. 143(2), the assessee filed a revised return on28th March, 2003, in which the sum of Rs. 1.5 crores on account of excess stock surrendered at the time of survey was shown as income in addition to the income returned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting the surrendered sum as income in the books of account. The AO also made a reference to the fact that the assessee apart from not disclosing the surrendered income in the return of income also claimed refund of taxes paid on the additional income that was surrendered at the time of survey. This fact according to the AO also shows that the assessee consciously and deliberately concealed the sum of Rs. 1.5 crores from its income in the original return. For all these reasons, the AO concluded that the assessee wilfully concealed the income in the original return. The AO thereafter relied on the decision of the Hon ble Kerala High Court in the case of CIT vs. A. Sriniwas Pai (2000) 160 CTR (Ker) 216 : (2000) 242 ITR 29 (Ker), wherein it has been held that revised return filed after books were impounded was not a voluntary return and that penalty was leviable for concealment of income. Relying on the aforesaid decision, the AO held that the filing of the revised return in the case of the assessee was not a voluntary one. For all the aforesaid reasons, the AO imposed a minimum penalty of 100 per cent of tax sought to be evaded which was quantified in a sum of Rs. 53,55,000. 7. Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surrendered at the time of survey was owing to an inadvertent error and, therefore, a revised return of income was filed declaring the income surrendered at the time of survey. According to him, all the acts of omissions cannot be attributed to be an act of commission. He then submitted that imposition of penalty is purely discretionary and the Court imposing penalty should take into consideration all facts and circumstances of the case. He placed reliance on several judicial pronouncements in this regard: (i) Prof. Chittaranjan Das Gupta vs. Asstt. CIT (1997) 58 TTJ (Cal)(TM) 39 : (1997) 61 ITD 1 (Cal)(TM) (ii) IAC vs. Smt. Raj Kumari Mahajan (1992) 40 ITD 337 (Chd) (iii) Gulam Rasul M. Rathan vs. Asstt. CIT (1996) 54 TTJ (Ahd) 30 : (1996) 57 ITD 129 (Ahd) (iv) Jawaharlal Goyal vs. ITO (1993) 47 TTJ (Del) 38 : (1993) 47 ITD 171 (Del) (v) Gian Chand Bhatia vs. Dy. CIT (1997) 57 TTJ (All) 644 : (1997) 61 ITD 24 (All) (vi) Hindustan Steels Ltd. vs. State ofOrissa(1972) 83 ITR 26 (SC) (vii) ITO vs. Fashionways (2002) 77 TTJ (Asr) 59 (viii) Hari Om Kumar Umesh Chand vs. ITO (2002) 124 Taxman 213 (Agra)(Mag) (ix) Inderlal M. Bharwani vs. Asstt. CIT (2003) 125 Taxman 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income on28th March, 2003, offering the sum of Rs. 1.5 crores surrendered at the time of survey as income of the previous year in the revised return of income. The AO did not take cognizance of the revised return of income and proceeded to make an addition of Rs. 1.5 crores to the income returned in the original return of income. According to the assessee, the income was offered in the revised return voluntarily and, therefore, there is no question of any concealment of particulars of income by the assessee. It is further the case of the assessee that the income surrendered was shown in the balance sheet filed along with the original return and this fact will go to prove that there was no intention on the part of the assessee to conceal particulars of income. According to the assessee, the omission to disclose this amount in the original return of income was bona fide and was owing to an inadvertent error or omission. The assessee was entitled to file a revised return on discovery of omission or error in the original return of income. Since the income was shown in the revised return, there is no concealment of income by the assessee. As far as the bona fides of the assessee are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, he may file a revised return. But the mere discovery of omission or wrong statement is not enough to absolve the assessee from the levy of penalty. The further requirement is that this omission or wrong statement in the original return must be due to bona fide inadvertence or bona fide mistake on the part of the assessee. This is a question of fact and the same has to be judged on the entire material available on record. The circumstances pleaded by the assessee to prove its bona fides have already been set out above. We shall now refer to the circumstances which were pointed out by the learned Departmental Representative to support her contention that the omission to include the income in the original return was not owing to any bona fide inadvertence or mistake: (A) There was a discovery consequent to survey which revealed that the assessee had made investment in stock outside the books of account to the extent of Rs. 1.5 crores. (B) On being confronted, the assessee surrendered the value of unexplained investment in stock as income of the previous year. The survey took place on4th March, 2002. (C) The assessee also paid taxes payable on the income surrendered between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en shown as income in the P L a/c besides including it in the opening stock and closing stock (excluding that which is sold and recorded in the books during the previous year after survey). 12. The fact that the assessment of the assessee would be compulsorily taken up for scrutiny and the assessee cannot hope to get away with the non-disclosure of the sum surrendered, in our view, will not absolve the assessee from the act of concealment. In any event, this circumstance alone cannot establish the fact that the omission to declare the income was owing to a bona fide inadvertence or mistake. As already stated, the circumstances only suggest that there was lack of bona fide on the part of the assessee in not declaring the income in the original return. The revised return was, therefore, outside the pale of s. 139(5). 13. Now, we shall consider the effect of Expln. 1 to s. 271(1)(c). As already stated, the amount in question was added to the total income declared by the assessee. What now has to be seen is as to whether the assessee has offered an explanation which is not found to be false and whether the explanation is bona fide, and whether the assessee has disclosed all particu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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