TMI Blog2015 (11) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee on 19th January 1993 was only by way of rectification of the defects pointed out by the AO in the notice issued under Section 139 (9) of the Act. This rectified return was related back to the original date when the return was filed on 31st August 1992. It cannot, therefore, be said that the original return was itself ‘non-est’ as contended by the Assessee. Consequently, filing of the revised return in terms of Section 139 (5) of the Act by the Assessee prior to the completion of the assessment on 31st March 1994 was within the time prescribed. Notice had already been issued in the course of the assessment proceedings to the Assessee under Section 143 (2) and Section 142 (1) of the Act. The revised return filed on 31st March 1994 was a valid return. There was no occasion, for the CIT (A) to consider the plea that the statement attributed to the Assessee, as recorded by the AO in the assessment order, was not in fact made by the Assessee or that documents tendered by the Assessee were not considered by the AO. On the contrary, the order of the CIT (A) showed that in the course of appellate proceeding, a remand report was sought from the AO on the additional grounds urged by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee under Sections 143 (2) and 142 (1) of the Act. One Mr. Mahender Mahajan, Chartered Accountant (CA) appeared on behalf of the Assessee and filed replies dated 21st January 1993 and 8th February 1993 respectively to the aforementioned notices. Subsequently, notices were issued under Sections 143 (2) and 142 (1) of the Act along with a questionnaire dated 29th December 1993. However, no response was given by the Assessee to the said notices. 4. In response to another notice issued under Section 143 (2) of the Act, one Mr. Inder Mohan Singh on behalf of the Assessee attended the assessment proceedings on 27th January 1994 before the AO. A final show-cause notice ( SCN ) dated 15th March 1994 was issued to the Assessee by the AO along with notices under Section 142 (1) of the Act setting out the proposals for AY 1992-93. In response to the said final SCN, Mr. Inder Mohan Singh, authorized representative (AR) of the Assessee, attended the assessment proceedings on 22nd March 1994 and requested for a short adjournment to enable the Assessee to file a revised return of income. 5. At this stage it requires to be noticed that in his statement of affairs filed along with his ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been received out of which at present you have a balance of ₹ 10,17,340. From the statement of account it is understood that large sums of money have been withdrawn in cash as well as by transfer through DDs. In this respect statement of yours was recorded on 17th February 1992 what do have to say in respect of this money which has come to your bank account. Ans. As already stated in my statement under Section 131 of IT Act, 1961 dated 17th February 1992 I am not in the knowledge about the details of the money received and the purpose of various withdrawals. As I have already stated on 17th February 1992 I have acted on the instructions of mainly Dr. Gopal, I cannot explain the sources of these receipts/withdrawals from the aforesaid current account No. 9958. Being a proprietor of M/s. Trinity International Corporation, I offer this unexplained income for taxation under Section 134 (4) read with explanation 5 of Section 271 (1)(c) which has been duly explained and understood by me. I may be exempted therefore from penalty and prosecution proceedings. The aforesaid amount may be treated as my unexplained income. I am voluntarily willing to pay taxes on the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, the Assessee retracted from his earlier admission of unaccounted income declared under Section 132 (4) made by him on 26th and 27th February 1992. The Assessee now claimed that the said amount of ₹ 12.91 crores, which have been received from Russia through official banking channels represented 100 % advance money for supplying, by way of export, a certain number of nickel and cadmium batteries to a party in the USSR for which TIC had entered into a contract. The AO further noted that the Assessee could not substantiate the above claim and had in fact surrendered the said sum of ₹ 12.91 crores by filing the revised return of income on 30th March 1994 declaring a total income of ₹ 12,91,97,398. 11. As regards a sum of ₹ 40 lakhs received into the bank account of DIC by way of clearing on 23rd January 1992, the Assessee claimed that this represented an equal amount which was withdrawn in cash from the bank account of TIC and was given as a short-term advance to one Mr. Radha Krishnan of M/s. P.B.R. Engineering. Mr. Radha Krishnan had returned it to him on 23rd January 1992 by way of a draft/pay order which was deposited by the Assessee into the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in law in holding amount of ₹ 40,00,000 received from Shri Radha Krishnan is as unexplained even though the same was against money paid to him from withdrawals from the bank even though there is no increase in funds of the Appellant by this amount. 15. The ITAT dismissed the appeal after holding that the revised return was filed voluntarily by the Assessee on 30th March 1994 on the basis of the surrender of the amount declared by him in the statement recorded under Section 132 (4) of the act during the course of search. The Assessee had been unable to explain the source of this receipt and offered it as income in the form of unexplained credit. The declaration made by the Assessee was voluntary and he also expressed his willingness to pay the tax on the said undisclosed income. The Assessee was unable to substantiate that the amount received from Russia was a windfall without there being any source. The ITAT also noted the observations of the CIT (A) that once the assessment had been completed under Section 143 (3) of the Act, the Assessee could not be permitted to withdraw the revised return. The ITAT rejected the plea of learned counsel for the Assessee that the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson retracting to demonstrate that the amount surrendered was not an income rather than the duty of the AO to bring evidence for accepting the admission made. The ITAT noted that till today the Assessee has never supplied any such goods nor refunded the amount. This shows the conduct of the Assessee and also demonstrates that the amount received was never for supply of goods under the so called contract. These are merely an eye wash. 19. Referring to the sequence of events, the ITAT noted that apart from the fact that there was no material to substantiate the Assessee s allegations that the revised return was filed under coercion, such coercion could not have persisted after 22nd March 1994 since the Assessee filed a revised return as late as 30th March 1994. The ITAT noted that till date, i.e., in the proceedings before them, the Assessee has not been able to file any evidence to suggest that the amount deposited in the bank account as explained and not unexplained deposit. Again in respect of addition of ₹ 40 lakh, no material was produced before the ITAT to suggest that the amount withdrawn from the bank account was given as short term advance to Mr. Radha Krishna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act had not been exhausted. It accordingly directed that the present appeal ITA No. 132 of 2008 be restored to file. 23. Consequent upon the above order dated 3rd September 2012, the present appeal was revived. On 28th January 2013, the following questions were framed for consideration: 1. Whether the return filed on 30th March 1994 is a valid revised return? 2. If the answer to question (1) above is in the negative, whether the surrender made in that return dated 30th March 1994 can be regarded as a piece of evidence? 3. Whether the Income Tax Appellate Tribunal could have relied on a purported statement made by the Assessee under Section 132 (4) when the Tribunal specifically noted that the statement was not available on the record? The Assessee fails to prove coercion 24. Since one of the issues concerns the statement made by the Assessee, which was not available in the file, this Court by its order dated 9th September 2015 directed the learned Senior standing counsel for the Revenue to keep ready for perusal by the Court all the original records of the assessment proceedings, the proceedings before the CIT (A) as well as the ITAT. However, despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r an AR, he also had sufficient time and opportunity to reflect on what had been stated by him during the search proceedings. The Court accordingly rejects the plea that the Assessee did not voluntarily make the statement attributed to him in the course of search or that he was coerced during the assessment proceedings to file the revised return. Neither the original nor the revised return was non-est 26. The Court has examined Section 139 (1) (b), Section 139 (4) and Section 139 (5) of the Act. As already noted the return originally filed was found to be defective. A notice was issued under Section 139 (9) of the Act asking the Assessee to rectify the defects. Section 139 (9) itself states that if the defects are not rectified within the time allowed, then notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provision of this Act shall apply as if the Assessee had failed to furnish the return. The first proviso to Section 139 (9) of the Act permits the AO to condone the delay where the Assessee rectifies the defect even after the period stipulated thereunder or such further period allowed by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) Learned Assessing Officer has erred on facts as well as in law in making addition of ₹ 40 lacs as unexplained income in spite of the fact that this amount is the return of the amount given earlier by the Appellant. (2) Learned Assessing Officer has erred on facts as well as in law in estimating the income from business at ₹ 1,00,000 against ₹ 22,400 declared by the Assessee. (3) Learned Assessing Officer has erred on facts as well as in law in making the addition of ₹ 40,95,120 as notional interest, which is neither permissible under the Act nor has this income accrued or been received by the Appellant. 31. On 7th December 1994 the following additional grounds were raised: (1) That the assessment order made is liable to be set aside for a fresh assessment as no fresh notice were issued under Section 143 (2) After filing of the revised return under Section 139 (5) which was duly accepted and acted upon by the learned Deputy Commission Assessment which was filed on 30th March 1994 and the assessment order was passed on 31st March 1994. (3) That no reasonable opportunity was given as the assessment was completed in a hurry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 833 (Ker) and Pyramid Saimira Theatre Limited v. CIT (2009) 316 ITR 75 (Mad) emphasise that a revised return can be filed only if an omission or wrong statement in the original return is discovered by the Assessee. 35. There is merit in the contention that the revised return should relate back to the return originally filed, minus the omissions and wrong statements. Even if the revised return replaces the original return, the assessment proceedings leading up to the revised return do not get obliterated. The decisions in CIT v. Chitranjali (1986) 159 ITR 801 (Cal), F.C. Agarwal v. CIT (1976) 102 ITR 408 (Gau.) and Sivagaminatha Moopanar Sons v. CIT (1964) 52 ITR 591 (Mad) appear to support this proposition. As rightly pointed out by Mr. Shivpuri, it could never have been intended by the legislature that the filing of the revised would wipe out the proceedings that have taken place till then. This would include the documents gathered or filed, and statements made, during the course of the assessment proceedings and the hearings conducted till then. The filing of the revised return was during the continuation of the assessment proceedings that began with filing of the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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