1. This appeal is filed by the Revenue against the order of the CIT(A), dt. 13th May, 1994, relating to asst. yr. 1990-91.
"1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in cancelling the impugned penalty of Rs. 43,489 levied by the AO under Section 271(1)(c) of the IT Act, 1961, for concealment of income ignoring the fact that the return of income was revised after the impounding of books under Section 131(3) of the IT Act, 1961.
2. It is prayed that the order of the learned CIT(A) may be vacated and that of the AO be restored.
3. That the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed of." 3. The relevant facts of the case appearing from the orders of the authorities below are that the assessee filed return of income on 3rd Sept., 1990, declaring total income of Rs. 52,290. Subsequently, the case was selected for scrutiny. Thereafter, the assessee filed revised/voluntarily return and disclosed an income of Rs. 1,42,378 which was assessed at the same figure. Penalty proceedings under Section 271(1)(c) on the basis of original return were also initiated.
A show-cause notice was also issued and in response to that the assessee submitted as under: "We beg to submit that the assessee had not concealed anything in the return of income. It was due to the acts of omission by the accountant for which the assessee has already suffered a lot.
However, he was prompt to file the revised return with an enhanced figure of income and bore the brunt of tax interest under Sections 234B + 234C. The whole tax including interest has been deposited before the filing the voluntary return." The AO was not satisfied with the contentions of the assessee and imposed a penalty of Rs. 43,489. In this regard, observations of the AO mentioned at para-3 of the order under Section 271(1)(c) are reproduced below : "3. It was during regular assessment proceedings that when the assessee produced books of account like ledger, cash books on 25th Feb., 1991, that my predecessor noticed gross discrepancies in his books of account and impounded books of account and immediately on 26th Feb., 1991, issued detailed letter to the assessee highlighting therein discrepancies which were noticed by him. The AO had examined the cash book and he had found that excess cash was introduced on numerous occasions right from 5th April, 1989, to 10th Feb., 1990.
Accordingly, books of account were impounded by him on this score.
It was, thereafter that the assessee was compelled to recast its trading P&L a/c and change the figures of purchases, sales, gross profit and net profit. The assessee himself admitted that particulars of income were not correctly furnished by him in two returns of income filed originally on 3rd Sept., 1990, and revised on 9th Jan., 1991, and it was after lapse of 11 months the assessee was ready to enhance its profit from 42,090 to Rs. 1,42,378. This means an addition of Rs. 90,288 is on the basis of books of accounts impounded in this case and it is thus clearly established that whatever books of account the assessee produced at the initial stage of assessments did not exactly tally with the two returns of income filed earlier. The argument of the assessee in its reply that mistake was due to the acts of omission and commission by the accountant, it cannot take advantage of any such plea as it was his duty to check the particular of income before filing the return. In the second revised return of income the true income was declared only after prior detection of the Department. This adequately confirms that a conscious attempt was made to conceal the real income and its true particulars. Under the circumstances the penalty was clearly exigible. It is thus established that income to the extent of Rs. 90,299 had escaped assessment. Resultantly, holding the assessee in default under Section 271(1)(c), I impose a penalty of Rs. 43,489." 4. In the first appeal, the learned counsel of the assessee argued that no penalty was imposable under Section 271(1)(c) of the IT Act as there was no default to conceal the particulars of income or furnish inaccurate particulars of income. The return was revised before the completion of the assessment and the revised return had been found to be correct. The submissions of the assessee were following : "In the instant case, assessee has revised his return of income as some entries regarding purchases/sales had not been recorded originally. The assessee has engaged a part-time accountant and on having found the discrepancies the assessee on his own revised the return voluntarily and have shown substantial increase in its (i) sales from Rs. 15,91,960 to Rs. 23,35,742 and (ii) profit from Rs. 52,290 to Rs. 1,42,378 and have also deposited the tax due thereon along with interest, etc. and have shown correct picture and have been cooperative with the Department in completing the assessment of correct picture/income.
After having filed the revised return the AO has accepted the same and has proceeded to complete the assessment on the basis of revised return. And furthermore assessment has been made on the basis of revised return itself.
The reason for revising the return had been fully explained to the then AO and he had verified the same.
The return filed was much before the assessment, and the P&L a/c statement filed subsequently showed correct income, the subsequent conduct of the assessee was within the permissible limits of law, and noway it established mens rea for concealment of income.
Various, High Courts have held the similar view, that penalty for concealment of income cannot be levied where the assessee has filed revised return before assessment, though after having served notice from the Department regarding assessment.
Furthermore, on similar facts penalty under Section 271(1)(c) has been deleted by your office in the case of M/s Abrol Industries, asstt. yr. 1990-91 vide order dt. 2nd Dec., 1993." 5. After considering the submissions of the learned counsel of the assessee, the learned CIT(A) held that no penalty was imposable under Section 271(1)(c) of the IT Act. The learned CIT(A) observed that the assessee rectified the position by filing a revised return and also extended fall cooperation in getting his income assessed on the basis of the revised return. Under those circumstances, the assessee's conduct could not, warrant levy of penalty. The learned CIT(A) relied on the decision of the Hon'ble Delhi High Court in the case of Qummar-Ud-Din & Sons (1980) 129 ITR 703 (Del) wherein it was held that: "The onus on an assessee imposed by Section 271(1)(c) and the Explanation thereto is to prove a negative and all that is possible for him to do is to indicate certain circumstances on the basis of which the absence of fraud or gross or willful neglect can be reasonably inferred. Conduct subsequent to the filing of the return is very relevant to the issue, The obligation of filing a return should be discharged scrupulously and sincerely, but at the same time before the assessee is mulcted with a penalty, all the circumstances and developments till the assessment is completed should be taken into account and if the collective effect of the situation is to show that the failure to return the correct income was 'not on account of gross or wilful neglect, the assessee should not be penalised." 6. Being aggrieved, the Department is in appeal. The learned Departmental Representative submitted that the assessee filed revised return only after discrepancies were pointed out to it. Hence, there was no justification on the part of the learned CIT(A) to delete the penalty as the true income was not disclosed in the original return.
The learned Departmental Representative strongly supported the order of the AO.7. In his rival submissions, the learned authorised representative relied on the order of the learned CIT(A) and also submitted that the Department accepted the revised return and the same was the only return available at the time of the assessment as the original return filed before the revised return became infructuous because the Department accepted the revised return. So there was no justification on the part of the AO for initiating and subsequently imposing penalty under Section 271(1)(c). The learned authorised representative further relied on the order of the Tribunal, Amritsar Bench, in the case of ITO v.Abrol Industries, Jammu in ITA No. 175/Asr/1994, relating to asst. yr.
1990-91, dt. 27th Oct., 1999.
8. We have heard both the parties and also gone through the orders of the authorities below. It is not in dispute that the Department accepted the revised return and no addition was made in the figure disclosed in the revised return. On the similar facts, the Tribunal, Amritsar Bench, has already deleted the penalty in the case of ITO v.Abrol Industries, Jammu (supra) wherein vide order dt. 27th Oct., 1999, the observations of the Tribunal at para 6 were following: "6. We have perused the orders of the authorities below. The law provides facility to the assessee to revise his return and show the correct income till assessment proceedings are completed. The questionnaire issued by the AO did not specifically mention the commission which has been basis of filing of the revised return. In fact, on the date when the case was fixed for the first time, the appellant revised his return and reflected the income and corrected the mistake in the P&L a/c. We do not find that this is a fit case where penalty can be imposed and we confirm the finding given by the learned CIT(A) on this issue. The appeal of the Revenue is dismissed accordingly." As the facts of the instant case are similar to those decided by the Tribunal, Amritsar Bench, in ITA No. 175/Asr/994 in the case of ITO v.Abrol Industries Jammu (supra), so by respectfully following the earlier decision of the Tribunal, Amritsar Bench, we find no infirmity in the order of the learned CIT(A) and the same is hereby upheld.