Explanation 5A to section 271(1)(c), read with
section 139. In absence of any limitation or restriction relating to
words ‘due date’ as given in clause (b) of Explanation 5A to section
271(1)(c), it cannot be read as ‘due date’ as provided in section 139(1)
alone, rather it can also mean date of filing of return of income u/s.
139(4). Therefore, where pursuant to search proceedings, assessee files
his return before expiry of due date u/s. 139(4) surrendering certain
additional income, he is entitled to claim benefit of clause (b) of
Explanation 5A to section 271(1)(c).
FACTS
The
assessee firm was carrying out business of housing development. A search
and seizure action u/s. 132(1) was carried out in case of assessee on
16th October 2008. In course of said proceedings, one of partners of
firm made statement u/s.132(4) declaring certain undisclosed income and
subsequently, the return was filed by the assessee declaring the amount
surrendered as income.
In the assessment order passed u/s.143(3)
read with section 153A, the assessment was completed on the same income
on which return of income was filed. The Assessing Officer also
initiated a penalty proceedings u/s. 271(1)(c).
The assessee,
before the Assessing Officer, submitted that this additional income was
offered voluntarily which was on estimate basis and the same has been
accepted in the assessment order as such, therefore, provisions of
section 271(1)(c) is not applicable. The Assessing Officer rejecting
assessee’s explanation levied penalty u/s. 271(1)(c).
In
appellate proceedings before Commissioner (Appeals), the assessee also
submitted that in view of clause (b) of Explanation 5A to section
271(1)(c) penalty could not be levied as the assessee filed return of
income on the due date which could also be inferred as return of income
filed u/s.139(4).
The Commissioner (Appeals) did not accept the
assessee’s explanation on Explanation 5A to section 271(1)(c), but
deleted the penalty on the ground that the income which was offered was
only on estimate basis, therefore, additional income offered by the
assessee could neither be held to be concealed income or furnishing of
inaccurate particulars of income.
On appeal by Revenue
HELD
There
is a saving clause in the Explanation 5A to section 271(1)(c) wherein
penalty cannot be held to be leviable u/s. 271(1)(c); according to which
if the assessee is found to be the owner of any asset/income and the
assessee claims that such assets/income represents his income for any
previous year which has ended before the date of search and the due date
for filing the return of income for such previous year has not expired
then the penalty u/s. 271(1)(c) shall not be levied.
The due
date for filing of the return of income u/s. 139(1) for assessment year
2008-09 was 30-9-2008, whereas the assessee has filed the return of
income on 31-10- 2008 i.e., after one month from the date of filing of
the return of income as provided in section 139(1). However the due date
for filing of the return of income u/s. 139(4) for the assessment year
2008-09 was 31-3-2010 and thus, the return of income filed by the
assessee in this case was u/s. 139(4).
The issue however is
whether the return of income filed u/s. 139(4) can be held to be the
‘due date’ for filing the return of income for such previous year as
mentioned in clause (b) of Explanation 5A to section 271(1)(c).
For
the purpose of the instant case, one has to see whether or not the
assessee has shown the income in the return of income filed on the ‘due
date’. Provisions of section 139(1) provides for various types of
assessees to file return of income before the due date and such due date
has been provided in the Explanation 2, which varies from year-to-year.
Whereas, provisions of section 139(4) provide for extension of period
of ‘due date’ in the circumstances mentioned therein and it enlarges the
time-limit provided in section 139(1). The operating line of
sub-section (4) of section 139 provides that ‘any person who has not
furnished the return within the time allowed’, here the time allowed
means u/s. 139(1), then in such a case, the time-limit has been
extended. Wherever the legislature has specified the ‘due date’ or has
specified the date for any compliance, the same has been categorically
specified in the Act.
In the aforesaid Explanation 5A, the
legislature has not specified the due date as provided in section 139(1)
but has merely envisaged the words ‘due date’. This ‘due date’ can be
very well-inferred as due date of the filing of return of income filed
u/s. 139, which includes section 139(4). Where the legislature has
provided the consequences of filing of the return of income u/s. 139(4),
then the same has also been specifically provided.
Once the
legislature has not specified the ‘due date’ as provided in section
139(1) in Explanation 5A, then by implication, it has to be taken as the
date extended u/s. 139(4). In view of the above, it is held that the
assessee gets the benefit /immunity under clause (b) of Explanation to
section 271(1)(c) because the assessee has filed its return of income
within the ‘due date’ and, therefore, the penalty levied by the
Assessing Officer cannot be sustained on this ground.
Thus, even
though the conclusion of the Commissioner (Appeals), is not affirmed,
yet penalty is deleted in view of the interpretation of Explanation 5A
to section 271(1)(c).
In the result, revenue’s appeal is treated as dismissed.
