Kerala High Court
Against The Order In Ita 84/C/1999 ... vs By Advs on 15 January, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
FRIDAY, THE 15TH DAY OF JANUARY 2021 / 25TH POUSHA, 1942
ITA.No.5 OF 2003
AGAINST THE ORDER IN ITA 84/C/1999 OF I.T.A.TRIBUNAL,COCHIN
BENCH
APPELLANT/RESPONDENT IN ITA NO.84/C/99
M/S.V.P.THOMAS & SONS
REPRESENTED BY PARTNER RAPHEAL TERRANCE,
KARTHEDATH JEWELLERY,
TRIPUNITHURA.
BY ADVS.
SRI.V.B.UNNIRAJ
SMT.P.ANITHA
SMT.R.S.GEETHA
RESPONDENT/APPELLANT IN ITA NO.84/C/99:
ASST.COMMISSIONER
INVESTIGATION CIRCLE - 2,
DIVN. I,
ERNAKULAM.
R1 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX
THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON
15.01.2021, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
I.T.Appeal No.5/03 -:2:-
JUDGMENT
Dated this the 15th day of January, 2021
Bechu Kurian Thomas, J.
For the assessment year 1987-88, appellant had filed his
return of income on 2.11.1987 reporting a loss in income. Prior
to the filing of the return, the sales tax authorities had conducted
an inspection of the business premises of the assessee and
unearthed suppression of purchase bills in the sales turnover. To
bring a quietus to the issue relating to suppression for sales tax
purposes, the assessee opted for compounding the offence under
Section 47 of the Kerala General Sales Tax Act and remitted the
compounding fee. In the meantime, on the basis of two letters,
the income tax department initiated enquiry proceedings.
However, the assessee filed a revised return under the Income
Tax Act 1961 (for short the Act) on 14.1.1991 and offered an
additional sum to be added towards his total income.
2. Since even at the time when the revised return was filed,
the assessment proceedings had not been completed, the
assessee was served with a notice on 12.3.1992 under Section
143(2) of the Act. Reply to the said notice was furnished on
23.3.1992 and the assessment was completed on the very same
day itself.
3. While the assessment order was issued, penalty
proceedings under Section 271(1)(a) and Section 271(1)(c) of the
Act was initiated separately resulting in the imposition of penalty
of Rs.65,000/- under Section 271(1)(c) of the Act by order dated
26.06.1997. Assessee challenged the order of imposition of
penalty before the CIT (Appeals). By order dated 11.12.1998, the
appeal was allowed finding that the imposition of penalty was not
correct. Challenging the order of the CIT (Appeals), the
department filed I.T.A. No.84 of 1999 before the Appellate
Tribunal. By the impugned order, the Tribunal allowed the
revenue's appeal after relying upon the judgment in
Commissioner of Income Tax v. A.Sreenivasa Pai (242 ITR
29) and confirmed the order imposing the penalty.
4. Assessee is in appeal before this Court under Section
260A of the Income Tax Act. It was admitted on four questions of
law. However, during the course of the hearing, the questions of
law were rephrased into two, as follows:
(1) Whether the revised return filed by the assessee under
the Act can be treated as a revised return completely
effacing the original return filed?;
(2) Whether the imposition of penalty under Section 271(1)
(c) of the Income Tax Act, 1961, was justified in the
facts and circumstances of the case?
5. We have heard Adv. Jaikrishnan for Adv.V.B.Unniraj,
learned counsel for the appellant and Senior Counsel
Sri.P.K.Raveendranath Menon instructed by Adv.Jose Joseph,
learned Standing Counsel for the respondent.
6. Learned counsel for the appellant vehemently canvased
for the proposition that once a revised return filed by the
appellant is accepted, the same ought to be treated as valid in
the eye of law and hence there was no suppression warranting
any imposition of penalty. He referred to the notice issued under
Section 148 of the Act to submit that since the assessment had
not been completed as on the date of filing of the revised return,
it must be deemed that the original return filed had been effaced
and replaced with the revised return and thereafter the revised
return became the only return filed and available in the eye of
law. It was also submitted that penalty under Section 271 of the
Act could not have been imposed since the requirements of the
said statutory provision was not satisfied in the light of the fact
that the alleged concealment of income was not revealed in the
course of any proceedings under the Income Tax Act. The learned
counsel also relied upon the decisions reported in Dhampur
Sugar Mills v. Commissioner of Income Tax (90 ITR 236),
Commissioner of Income Tax v. Mangalore Chemicals and
Fertilizers Ltd. (191 ITR 156) and Commissioner of Income
Tax v. Suresh Chandra Mittal (241 ITR 124) and canvassed for
the proposition that once the revised return is filed, the original
return ought to be treated as never filed in the eye of law.
7. The learned Senior Counsel Sri.P.K.Raveendranath Menon
opposing the aforesaid contentions argued that the revised
return filed by the assessee was not a return in the eye of law
and hence the contentions urged by the assessee cannot be
countenanced. It was also pointed out that the proceedings
under Section 271 of the Act were initiated only in the course of
the assessment proceedings which was brought to the notice of
the assessing officer by the assessee during the revised
assessment. He, therefore, sought for dismissal of the appeal.
8. Section 139(5) of the Income Tax Act, as it existed
during the relevant period, is extracted as below:
"S.139.(5). If any person, having furnished a return under
sub-section (1), or in pursuance of a notice issued under sub-
section (1) of section 142, discovers any omission or any
wrong statement therein, he may furnish a revised return at
any time before the expiry of one year from the end of the
relevant assessment year or before the completion of the
assessment, whichever is earlier:
Provided that where the return relates to the previous year
relevant to the assessment year commencing on the 1 st day
of April, 1988, or any earlier assessment year, the reference
to one year aforesaid shall be construed as a reference to
two years from the end of the relevant assessment year."
9. It is true that as per the provisions of Section 139(5) an
assessee is entitled to file a revised return on discovering any
omission or any wrong statement. The right to substitute an
incorrect return with a correct and complete return is given to an
assessee by law. When the assessee files a revised return, he is
in fact admitting that the original return filed by him was not
correct or proper. The revised return filed by the assessee will be
substituted in the place of the original return. The effective
return is thus the revised return.
10. However, in order to treat the revised return as the true
and complete record, certain conditions are to be satisfied. The
first of which is that, if the assessment relates to a period prior to
1.4.1988, the revised return must be filed either before two years
from the end of the relevant assessment year or before the
completion of the assessment, whichever is earlier. For a revised
return to have the legal attributes of one as effacing the original
return completely and for the assessee to have the benefit of
revised return in all respects, it is essential that the revised
return be filed in accordance with law.
11. Having said so, we find that in the instant case, revised
return was filed only on 14.1.1991, while the two years period for
filing the revised return under Section 139(5) as it then stood for
the assessment year 1987-88 expired on 31.3.1990. In the
aforesaid factual scenario, it cannot be held that the revised
return filed by the assessee can be treated in the eye of law as a
return to substitute the original return with the revised one with
the effect of completely effacing the original return. The
decisions relied upon by the learned counsel for the appellant are
not strictly applicable to the facts of the present case, though we
have no quarrel with the propositions laid therein.
12. Once we have found that the revised return cannot
have the effect of effacing the original return, it is explicit that
concealment of the particulars of income and furnishing of
inaccurate particulars of income were revealed to the assessing
officer in the course of proceedings under the Act. There could
be no manner of doubt that, if the assessing officer in the course
of any proceedings under the then Act becomes satisfied about
the concealment of income or furnishing of inaccurate particulars
of such income, he is entitled to initiate proceedings for
imposition of penalty as per Section 271(1)(c) of the Act. In the
aforesaid circumstances, we answer the questions of law
rephrased by us as follows:
(i) In a case in which revised return was not filed within the
time stipulated under law, the legal nature and attribute of a
revised return cannot be stricto sensu be claimed by the
assessee.
(ii) Since the assessing authority came to the knowledge of
the concealment and incorrect particulars furnished by the
assessee through the revised return, penalty proceedings under
Section 271 of the Act was validly initiated.
In the aforesaid circumstances, We answer the questions of
law as mentioned above and dismiss this appeal.
Sd/-
S.V.BHATTI
JUDGE
Sd/-
BECHU KURIAN THOMAS
JUDGE
vps
APPENDIX
PETITIONER'S/S EXHIBITS:
ANNEXURE.A A TRUE COPY OF THE ASSESSMENT ORDER
ANNEXURE.B A TRUE COPY OF THE ORDER OF THE
COMMISSIONER OF INCOME TAX (APPEALS),
KOCHI.
ANNEXURE.C A TRUE COPY OF THE ORDER OF THE
ASSISTANT COMMISSIONER OF INCOME TAX,
INVESTIGATION CIRCLE 2 DIVISION.I.,
ERNAKULAM.
ANNEXURE.D A TRUE COPY OF THE ORDER OF THE
COMMISSIONER OF INCOME TAX (APPEALS),
KOCHI.
ANNEXURE.E A TRUE COPY OF THE ORDER OF THE INCOME
TAX APPELLATE TRIBUNAL, COCHIN BENCH.
RESPONDENT'S/S' EXHIBITS:
NIL
