Dy. Commissioner of Income Tax and Another vs Jeevan Saldanha

B.V. Nagarathna, J.—This appeal has been filed by the revenue challenging the order dated 28-2-2005 passed in ITA No. 2324/Bang/2004 by the Tribunal at Bangalore, Bench.

The facts of the case are that the assessee had filed return of income declaring .the taxable income of Rs. 10,56,280 and the said return of income was processed and subsequently notice u/s 148 of the Act was issued to the assessee by the assessing officer, in response to which, a revised return declaring an income of Rs. 15,06,905 was filed by the assessee and the same was processed u/s 143(1) of the Act. Thereafter there was a revised return filed for the second time declaring an income of Rs.19,65,890 and the same was also processed u/s 143(1) of the Act. However, a survey was conducted u/s 133A of the Act in the business premises of the assessee on 23-1-2002, during the course of which, the assessee admitted additional income of Rs. 91.15 lakhs on the ground that there were certain discrepancies in the claim of creditors for the assessment years 1996-97 to 1999-2000. In order to set right the above discrepancy, the assessee came out with a declaration to offer the credits and unexplained warranty for the said years by filing revised return of income dated 20-2-2002, disclosing the above income. By holding that the assessee had failed to disclose true affairs of his business and had concealed the particulars of income, notice u/s 274 read with Section 271(1)(c) of the Act was issued calling upon him to show cause as to why penalty should not be imposed for concealing the particulars of income chargeable to tax. The said notice was replied giving an explanation and an order came to be made u/s 271(1)(c) of the Act on 27-9-2002 levying a penalty of Rs. 3,65,795. Aggrieved by the said order, an appeal was filed by the assessee before the Commissioner (Appeals), Mangalore, which came to be dismissed on 24-3-2004, against which the appeal was preferred before the Tribunal, Bangalore, in ITA No. 2324/Bang/2004. The Tribunal vide order dated 28-2-2005 allowed the appeal and the same has been questioned in this appeal.

We have heard for the appellants and the learned Counsel for the respondent.

We are of the view that the substantial questions of law which have been framed by the appellants at the time of filing the appeal requires modification. Accordingly, learned Counsel for the appellants has filed a memo stating the modified substantial questions of law. The memo is taken on record and the substantial questions of law are as follows:

(i) Whether the Tribunal was correct in holding that the original return of income which was furnishing inaccurate particulars and concealing the particulars of income detected in the course of survey conducted by the department will not amount to concealment as per Section 271(1)(c) of the Act as the assessee came forward to file second return disclosing the detected income to buy peace with the department?

(ii) Whether the judgments relied on by the Tribunal in the case of Sir Shadi Lal Sugar and General Mills Ltd. and Another Vs. Commissioner of Income Tax, Delhi, of the apex court and other High Court judgments were no longer good law in view of the amendment to Section 271(1)(c) of the Act and the law declared by the Larger Bench of the apex court in the case of M/s. K.P. Madhusudhanan Vs. Commissioner of Income Tax, Cochin, ?

From the order of the Tribunal, we find that the relief has been given to the respondent-assessee by holding the imposition of penalty is bad in law, lasted on the judgment of the apex court in the case of Sir Shadi Lal Sugar and General Mills Ltd. and Another Vs. Commissioner of Income Tax, Delhi, and other judgments of the apex court and various High Courts which aspect of the matter has been brought to our notice by the learned Counsel for the appellant by relying upon the decision of apex court in the case of M/s. K.P. Madhusudhanan Vs. Commissioner of Income Tax, Cochin, . Keeping in view the aforesaid decision and also the amendment made to Section 271(1) of the Act, we are of the considered view that the matter requires reconsideration and accordingly, the same is remanded to the Tribunal. We direct that the entire issue be considered in the light of the amendment made to Section 271 and the decision in K.P. Madhusudhanan''s case (supra).

Accordingly, the matter is remanded to the Tribunal without answering the substantial questions of law.