TMI Blog2011 (5) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... 144 was that he had handed over the said notices to the income-tax practitioner, Shri K. J. Joshi to do the needful in the matter. That he being his tax consultant he relied upon his assurance while in fact he betrayed him. However, the revisional authority has without even considering the explanation put forth by the petitioner, dismissed the revision petition merely on the ground that the petitioner had not responded to the notices issued -no penalty could be levied on the petitioner u/s 271(1)(c) - Decided in favor of Assessee. - 4771 of 2002 - - - Dated:- 13-5-2011 - HARSHA DEVANI MS., CHHAYA R. M. JJ. JUDGMENT Ms. Harsha Devani J.- 1. By this petition under article 226 of the Constitution of India, the petitioner has challenged the order dated September 15, 1999, passed by the Income-tax Officer, Ward No. 2(5), Rajkot, imposing penalty of Rs. 83,640 against the petitioner under section 271(1)(c) of the Income-tax Act, 1961 ("the Act"). The petitioner also challenged the order dated February 22, 2002, passed by the Commissioner of Income-tax, Rajkot-III, rejecting the revision petition filed by the petitioner under section 264 of the Act. 2. The petitioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been deemed to be concealment under section 271(1)(c) of the Act. It was further submitted that non-furnishing of a return of income would amount to concealment within the meaning of section 271(1)(c) of the Act as envisaged under Explanation 3 thereof, provided the requirements of the Explanation are satisfied. According to the learned advocate, for the purpose of falling within the purview of Explanation 3 to section 271(1) of the Act, as it stood at the relevant time, certain conditions precedent are required to be satisfied : firstly that such person should not have been previously assessed ; secondly, that such person should have failed to furnish return of income within the period specified under sub-section (1) of section 153, that is, within a period of two years in respect of any assessment year commencing on or after the 1st day of April, 1989 ; thirdly, that until expiry of such period no notice should have been issued to him under clause (i) of sub-section (1) of section 142 or section 148 of the Act ; and, fourthly, that the Assessing Officer or the Deputy Commissioner (Appeals) should be satisfied that in respect of such assessment year, such person has taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, the non-furnishing of return of income per se amounts to concealment of particulars of income as envisaged under section 27(1)(c) of the Act. 7. The next submission advanced by the learned counsel for the respondent was that the petitioner had not raised the contention regarding the applicability or otherwise of Explanation 3 to section 271(1) of the Act either before respondent No. 1 or before respondent No. 2 and as such, it is not permissible for the petitioner to raise such contention before this court for the first time. It was further submitted that reliance placed upon the provisions of Explanation 3 to section 271(1) of the Act would not be of any avail to the petitioner inasmuch as, the petitioner had not filed any return for the relevant year which amounts to non-disclosure of income and as such, the petitioner having concealed the particulars of his income for the year under consideration, respondent No. 1 had rightly imposed penalty under section 271(1)(c) of the Act. It was further submitted that once there is an actual concealment of income, there is no question of any deemed concealment and, therefore, the provisions of Explanation 3 to section 271(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied that in respect of such assessment year such person has taxable income, then, such person shall, for the purposes of clause (c) of this sub-section, be deemed to have concealed the particulars of his income in respect of such assessment year, notwithstanding that such person furnishes a return of his income at any time after the expiry of the period aforesaid in pursuance of a notice under section 148." 10. A plain reading of section 271(1) of the Act shows that if the Assessing Officer or any of the officers specified under the said sub-section, in the course of any proceedings under the Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of his income, he may direct that such person shall pay penalty in accordance with the provisions of the Act. In the facts of the present case, the failure on the part of the petitioner is non-furnishing of return of income for the assessment year under consideration. As to whether failure to furnish return of income per se amounts to concealment of income, the law all along has been that mere failure to file a return of income is not tantamount to concealment of particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(1) or 148 is issued to him till the expiry of the said period, he will be treated to have concealed his income and penalty will be leviable on him accordingly if he is later found to have had taxable income in that year. Thus, for the purpose of falling within the purview of Explanation 3, firstly, a person should not have been previously assessed (that is, a new assessee) ; secondly, he should have failed without reasonable cause, to furnish his return of income for the assessment year 1989-90 or any year subsequent thereto within two years from the end of the assessment year concerned ; thirdly, that no notice should have been issued to him under section 142(1) or section 148 of the Act till the expiry of the two-year period ; and, lastly, the concerned officer is satisfied that in respect of such assessment year, such person had taxable income. In such cases, Explanation 3 provides that such person shall be deemed to have concealed the particulars of his income within the meaning of clause (c) of section 271(1) of the Act for such assessment year. In such an eventuality, even if the person concerned files a return after the expiry of the said period of two years in pursuance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he meaning of Explanation 3 to section 271(1) of the Act. 15. In the light of the aforesaid, it is apparent that the case of the petitioner does not fall within the ambit of Explanation 3 to section 271(1) of the Act and as such, no penalty could be levied on the petitioner under section271(1)(c) of the Act for concealment of particulars of his income on the ground that the petitioner had failed to furnish return of income for the year under consideration. The impugned order, therefore, being contrary to the provisions of the Act cannot be sustained. 16. In so far as the order passed by the revisional authority is concerned, in the revision application the petitioner has stated that the reason for not appearing in response to the notices issued under sections 148 and 144 of the Act, was that he had handed over the said notices to the income-tax practitioner, Shri K. J. Joshi to do the needful in the matter. However, for reasons best known to him he never attended and at the same time assured the petitioner that every thing had been followed up and cleared. That he being his tax consultant he relied upon his assurance while in fact he betrayed him. However, the revisional author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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