TMI Blog2017 (10) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... pe of the question before the special bench. The matter shall now go back to the division bench for giving effect to our above observations and for deciding the matter afresh in the light of, inter alia, the above stated legal position. Pronounced in the open court today on the 26th day of September 2017. - ITA No.498/Ahd/2011 - - - Dated:- 26-9-2017 - Shri G D Agarwal, President, Pramod Kumar, Accountant Member And Shri Rajpal Yadav, Judicial Member For The Appellant : S N Soparkar, Senior Advocate, along with Urvashi Shodhan, D K Parikh and Parin Shah For The Respondent : Jagdish, Commissioner (DR), and Prasoon Kabra ORDER Per Pramod Kumar, AM: Background: 1. On a Division Bench s recommendations dated 18th December 2014, doubting correctness of another division bench order holding that the provisions of Section 221 (1) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) cannot be invoked in respect of non-payment of self-assessment tax under section 140A at the time of filing an income tax return which has been revised subsequently, Hon ble President has constituted this Special Bench to decide the following question: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-payment of self-assessment tax liability under section 140A. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee came in appeal before this Tribunal. When the matter was being heard by a division bench of this Tribunal, the assessee relied upon a decision of another division bench, in the case of ACIT Vs Shri Shakti Credits Limited [(2014) 66 SOT 0175 (Lucknow)] which has, inter alia, held as follows: we find that though the assessee has not paid admitted tax at the time of filing of the original return, but this return was duly revised within the prescribed period under section 139(5) of the Act and at the time of filing the return under section 139(5) of the Act the admitted tax was paid. The revised return also substitutes the original return, as the assessment was framed on the basis of the revised return. Therefore, the assessee has filed the return under section 139 of the Act and at the time of filing of the return, the admitted tax liability was also paid. Provisions of sub-section (3) of section 140A of the Act can only be invoked where the assessee has not paid admitted tax liability while filing the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on standalone basis. On the basis of this line of reasoning, learned counsel urges us to deal with entire appeal and not be limited to the question framed for the consideration of special bench. Shri Jagdish, learned Commissioner (DR), on the other hand, urges us to take a call on the question referred to us. He points out that the division bench has, while referring the matter to the special bench, expressed reservations on correctness of decision of another division bench, in the case of Shri Shakti Credits (supra), which was relied upon by the assessee himself. The stand so taken by the division bench was thus quite righteous and fair in approach, and, now that the division bench has raised that doubt, it is bounden duty of the special bench to express its views on the question referred to the special bench. He thus urges us to adjudicate upon the question referred to the special bench. He, however, was gracious enough to leave it to us to take this call, and assures us that no matter what path we chose, he has no issues either way. In brief rejoinder, learned senior counsel stated that he also has no issues either way and he has simply explained his point of view and he lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account was ₹ 577,08,58,160, the original profit and loss account disclosed sales and operating income at ₹ 586,05,03,708. It was also submitted that, as per note 1(a) in schedule 20 to the revised annual accounts, it was noted that subsequent to the finalization of original profit and loss accounts, certain omissions and mistakes came to the notice of the management of the company, and, therefore, financial statements have been revised incorporating the changes required to be made to give suitable effects of omissions and mistakes . On the basis of these facts, it is emphasized that the revision of return was wholly bonafide. It is also pointed that that the return was revised well within permissible limit and there is no, and there cannot be any, dispute on this aspect of the matter either. 8. Learned senior counsel then submits that the impact of filing of a bonafide revised return is that once a valid revised income tax return is filed, old income tax return is to be ignored in entirety as it supplants, supersedes and replaces the original income tax return. He invites our attention to Hon ble Punjab and Haryana High Court s judgment in the case of Beco Engi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x liability at the time of filing of the income tax return, unlike, for example, time specific lapses such as the lapses referable to Section 201, 218, 220(1) r.w.s 220(4) etc which relate to lapses at a particular point of time. In this case, according to the learned counsel, filing of an income tax return is integral to penalty under section 221(1), and, therefore, the imposition of penalty cannot be divorced from the filing of income tax return, but then, as learned counsel hastens to add, once the income tax return itself is lawfully revised, the original return ceases to have any relevance. Learned counsel argues that when penalty under section 221(1) r.w.s 140A is to seen as penalty for an event specific lapse, as we are obliged to view the same, it is immaterial whether the payment was not made at the time of filing original income tax return and was made only at the point of time when revised return of income is filed. Viewed thus, according to the learned counsel, merely because admitted tax liability was not paid at the time of filing the original income tax return, though paid at the time of filing the revised income tax return, penalty under section 221 r.w.s 140A canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not take away the penal consequences of the lapse in not paying the admitted tax liability at the time of filing of the return. Learned Departmental Representative then submits that if we are to proceed on the basis that filing of correct and bonafide revised return, with due admitted tax payment, will exonerate the assessee of its earlier lapse in not paying the admitted tax liability at the time of filing of original income tax return, it will not only be inequitable inasmuch as it will be tilting in favour of the person making mistake in filing of original income tax return, it will also incentivise making mistakes in filing of the income tax returns. Learned Departmental Representative then invites our attention to Hon ble Bombay High Court s judgment in the case of Reliance Industries Ltd Vs CIT [(2015) 377 ITR 74 (Bom)] in support of the proposition that penalty under section 221 is leviable even if tax has been subsequently deposited before the initiation of penalty proceedings. Learned Departmental Representative then invites our attention to Hon ble Supreme Court s judgment in the case of Prakash Nath Khanna Vs CIT [(2004) 266 ITR 1 (SC)], in support of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non issuance of notice under section 143(2), post filing of the revised return, would invalidate the assessment proceedings. The observations made in an altogether different context should not be taken into consideration, for the present purposes, as the law laid down by Their Lordships. Learned counsel once again reiterates his submissions and urges us to hold that since the assessee has filed a valid revised return and the assessee has duly paid admitted tax liability thereon, penalty under section 221(1) r.w.s. 140A cannot be imposed in respect of lapse in non-payment of admitted tax liability in respect of original income tax return. 13. We have considered the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. Our analysis: 14. In order to express our opinion on the question referred to us, it is necessary to understand as to what is the nature of lapse which is sought to be penalized by imposition of penalty under section 221(1) read with section 140A, and the impact of revision of income tax return so far as this lapse is concerned. 15. We may begin by reproducing the relevant stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The default triggering the penal liability under section 221(1) is the default in making payment of tax, and that the default in payment is tax is with reference to the filing of the income tax return. Viewed thus, default is committed at the point of time when a return of income is filed without making payment of the admitted tax liability. Clearly, therefore, the assessee committed a default in not paying the admitted tax liability when it filed the original income tax return, without payment of admitted tax liability, on 30th September 2008. To this extent, there is no dispute or ambiguity at all.The question then arises as to what is the impact of filing a revised income tax return. To the extent it pertains to the assessment proceedings, undoubtedly inasmuch as it is the validly revised return is the starting point for the assessment of income, the original income tax return ceases to be relevant. However, that substitution of income tax return is only for the purposes of assessment of income. All the judicial precedents cited at the bar is on these lines. The questions which have come up for consideration in the context of all these judicial precedents is assessment of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case, the Courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings. In H.H. Maharajadhiraja Madhav Rao Jiwaji Rao Scindia Bahadur v. Union of India [1971] 3 SCR 9 this Court cautioned: It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment. 17. We may also, in this context, refer to the words of guidance by Hon ble Supreme Court in Mumbai Kamgar Sabha vs. Abdulbahi Faizullbhai AIR 1976 SC 1455 wherein their Lordships have, in their inimitable and felicitous words observed thus, It is trite, going by anglophonic principles that a ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequences of earlier lapse must not be visited with penal consequences. The answer has to be emphatically in negative. What has been stated in the context of computation or assessment of income does not really hold good in respect of lapse committed at the time of filing of the original income tax return- which is required to be visited with penal consequences under section 221(1). The assessee has undoubtedly committed the default in not making payment of admitted tax liability under section 140A(1) at the point of time when this income tax return was filed, and it is this default in respect of which penalty is imposable under section 221(1). As Section 221(1) itself states in so many words, the assessee shall not cease to be liable to any penalty under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax . Subsequent payment of tax, whether with or without revision of income tax return, is thus of no help to the assessee so far as penal consequences under section 221(1) are concerned. The law is clear and unambiguous. As regards learned counsel s submissions regarding event based triggers for penal consequences and time base ..... X X X X Extracts X X X X X X X X Extracts X X X X
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