HON’BLE SRI JUSTICE B. PRAKASH RAO AND HON’BLE SRI JUSTICE R. KANTHA RAO I.T.T.A. No. 11 OF 1999 Between: M/s. Andhra Bottle Trading Co. Ltd. ……. Petitioner and The Income Tax officer ……. Respondent HON’BLE SRI JUSTICE B. PRAKASH RAO AND HON’BLE SRI JUSTICE R. KANTHA RAO I.T.T.A. No. 11 OF 1999 JUDGMENT: (Per BPR, J) The appellant is an assessee in this appeal filed under Section 260 A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), inter alia, seeking to assail the orders in the appeal at the instance of the Revenue in I.T.A.No.1125/H/91, dated 05-10-1998 on the file of the Income Tax Appellate Tribunal, Hyderabad Bench ‘A’, Hyderabad, allowing the said appeal and setting aside the orders of the CIT(A)-II, Hyderabad, dated 28-02-1991, wherein the appeal at the instance of the assessee was allowed setting at naught the proceedings of the Assessing Officer. In brief the facts are that for the assessment year 1986-87, the action on the part of the Revenue in regard to the levy of penalty of Rs.2,67,000/- under Section 271(1)(C) of the Act, is under challenge. Initially the assessee filed the return on 02-03-1987 showing the income of Rs.2,08,446-25 ps from his business. Later, on 26-10-1987 the assessee filed revised return admitting the revised income of Rs.1,72,526-25 ps. Thereafter, since the income exceeded Rs.2,00,000/- as per the original return, for the purpose of verification a notice under Section 143(2) of the Act was issued apart from issuance of summons under Section 131 of the Act to the partners of the firm, namely Gulam Jeelani and Abdul Haroon. Sworn statements of Abdul Haroon and Kursheed Ali, Advocate and authorized representative, were recorded on 09-12-1987. The books of accounts which are produced after examination were impounded in exercise of the powers under Section 131(3) of the Act on 14-12-1987. However, having regard to several cash deposits received by the assessee in the name of hawkers, which amounted to Rs.5,34,229/-, the Assessing Officer called upon the assessee to produce evidence in support of these credits. Instead of complying with the said requisition, the assessee filed a revised return on 25-01- 1988 admitting the income of Rs.7,53,446-25 ps which also includes the aforesaid credits amounting to Rs.5,34,000/- apart from the income from undisclosed sources. Subsequently, the assessment was completed under Section 143(3) of the Act as per the orders on 29-03- 1988 apart from initiating proceedings for levy of penalty purportedly under Section 271(1)(c) of the Act. In these proceedings, the total income determined was at Rs.7,75,530/-. The assessee submitted an explanation to the aforesaid notice denying the pleading for want of proper opportunity and further stating that having regard to the submission of valid revised return, he cannot be proceeded against. However, having not satisfied with the said explanation, the Assessing Officer levied a penalty of Rs.2,67,000/- under Section 271(1)(c) of the Act. The assessee preferred an appeal before the CIT(A), which was allowed on the ground that the assessee voluntarily filed the revised returns and declared all such cash credits, and consequently cancelled the penalty. Thereupon the Revenue preferred the appeal before the Appellate Tribunal. In the said appeal, after taking into consideration the respective versions, the Appellate Tribunal allowed the appeal at the instance of the Revenue, proceeding on the basis that it is an act of concealment on the part of the asseessee and it is only when the Assessing Officer ignored the earlier return, the subsequent revised return has been filed and therefore, the notice was issued under Section 143(2) of the Act for making regular assessment. That apart, instead of responding to the notice for production of the evidence in support of the cash credits found in the books of accounts which have been impounded, the assessee sought to file revised return on 25-01-1988 admitting the income of Rs.7,53,446-25 ps. Therefore, such filing of the revised return later is under the compelling circumstances only when the undisclosed income of the assessee has been detected and hence, it cannot be accepted as voluntary. In support, the Appellate Tribunal sought to place reliance on the decision in HAKAM SINGH AND OTHERS v. CIT [1]. Aggrieved thereby, the present appeal is filed. Having heard the learned counsel for the appellant and the learned Standing counsel for the Revenue, the only point, which arises for consideration, is whether on these facts and circumstances, the return filed by the assessee on 25-01-1988 is a voluntary return and if any penalty could be levied in exercise of the powers under Section 271(1)(C) of the Act for the assessment year 1986-87? Falling back to the aforesaid chequred events, there is no much dispute in regard to the fact that the original return was filed by the assessee on 02-03-1987 followed by another return on 26-10-1987 and the present revised return is filed on 25-01-1998. The facts also disclose that the later revised return is the one which was filed after the notice was issued under Section 143(2) of the Act. After recording the statement of the persons on 09-12-1987, the books and material, which has been produced by the assessee, was impounded on 14-12-1987. Thereupon, undisputedly, the Assessing Officer called upon the assessee to produce the material in support of the cash credits. This was followed by disclosure of the income in the revised return filed on 25-01-1998. From these facts what emerges is irrespective of the factum of filing of the earlier return, the assessee himself came forth on his own by showing the income as per the latest return on 25-01-1998 which not only swells more than the one which has been shown in the earlier two returns, but also shows even the possible income on verification of the material by the authorities. It is not a case where the undetected income has been found at the behest of the Revenue on their own and the assessee is asked to explain or any such proceedings are initiated. With these factual matrix, which is not much in dispute, it is relevant to refer to the decision of the Apex Court in T. ASHOK PAI v. COMMISSIONER OF INCOME TAX, BANGALORE [2], wherein considering the very same provision under Section 271(1)(C) of the Act in a case where also a revised return was filed, since the earlier return was not satisfied with, it was held that for levy of penalty, it has to be proved that the assessee had consciously made concealment or furnished inaccurate particulars of income and mere omission or negligence would not constitute deliberate act on the part of the assessee, and consequently set aside the penalty imposed therein. The aforesaid decision squarely applies to the facts of this case since this case does not depict any such attributory act on the part of the assessee himself. I n COMMISSIONER OF INCOME-TAX v. SURESH CHANDRA MITTAL [3], the High Court of Madhya Pradesh (Indore Bench), while considering similar such situation, held: “7. In the present case, though it is true that the assessee had not surrendered at all and that he had done so on the persistent queries made by the Assessing Officer, but once the revised assessment was retgularised by the Revenue and once the assessing authority had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of vexed litigation could be treated as bona fide in the facts and circumstances of the case. Therefore, the Tribunal was justified in canceling the penalty levied by the Assessing Officer and affirmed by the Commissioner of Income-tax (Appeals) in the facts and circumstances of the case. This reference is accordingly answered in the affirmative holding that the Tribunal was justified in doing so.” I n UNION OF INDIA (UOI) v. RAJASTHAN SPINNING AND WEAVING MILLS [4], considering the provisions of Section 11AC of the Central Excise Act, 1944, the ratio decidendi laid therein is as follows: “If there is any deliberate deception by Assessee with the intent to evade duty by adopting any of the means mentioned in the Section, then Penalty under Section 11AC can be imposed.” Even though several other decisions are cited across the Bar, which are earlier to the aforesaid decision of the Apex Court in T. ASHOK PAI’s case (2 supra) and since this decision of the Apex Court is the latest one governing the field, we are of the view that it does not call for any detailed reference nor any discussion. In the above circumstances, following the above principles, we allow the appeal and hold that the revised return of income filed by the appellant-assessee on 25-01-1998 disclosing the income of Rs.7,53,446-25 ps is a voluntary return and the appellant-assessee is not liable to pay any penalty under Section 271(1)(C) of the Act, for the assessment year 1986-87. The order, dated 05-10-1998 in I.T.A.No.1125/H/91 stands set aside. No order as to costs. _________________ B. PRAKASH RAO, J ________________ R. KANTHA RAO, J Date: 11-03-2011 YCR [1] 124 ITR 228 [2] (2007) 292 ITR 11 (SC) [3] (2000) 241 ITR 124 (MP) [4] (2009) 224 CTR (SC) 1