Case Law Details
HIGH COURT OF KARNATAKA
Commissioner of Income-tax
versus
Vega Auto Accessories (P.) Ltd.
IT Appeal Nos. 5014 to 5016 of 2011
August 8, 2012
JUDGMENT
N. Kumar, J.
As the questions involved in all these appeals are one and the same and between the same parties for different assessment years, they are taken up for consideration together and disposed off by this common order.
2. The assessee is a manufacturer of safety head-gear being helmets and sells their goods in the name of ‘Vega’ branded helmet. There was a survey action in the business premises on 17.10.2007 wherein the suppression of sales was detected by the assessing Officer, based on the search conducted in the assessee’s premises by the Director General of Central Excise (intelligence), Bangalore, on 07.02.2006. Therefore, consequent upon the survey, the assessee filed the revised returns on 05.12.2007 for the assessment years 2004-05 to 2006-07 declaring the additional income on account of the initial capital of Rs. 6,50,000/- and suppression of sales of Rs. 34,94,129/- for assessment year 2004-05, Rs. 66,279/-. for assessment year 2005-06 and Rs. 82,85,703/- for assessment year 2006-07. After the said revised returns were filed, the assessing officer issued a notice under Section 148 of the Income Tax Act, 1961 [for short ‘the Act’].
3. The case of the Revenue is the aforesaid facts clearly demonstrates the concealment of income by way of suppression with intention to evade tax and even failed to revise the income after the ‘ date of survey conducted by the Central Excise Department. Therefore, the Assessing Officer finalised the assessment under Section 143(3) read with Section 147 of the Act making the additions. He also called upon the assessee to show-cause why the penalty proceedings should not be initiated. In reply to the same, the assessee contended that there was no concealment involved as to additional income was found at the time of survey, except additional sales declared before the Central Excise authorities.
4. Secondly, he contended that he has filed revised returns upon the completion of the proceedings under the Central Excise Act. Not only he filed the revised returns, he has also paid taxes and interest payable thereon. Overruling the said objections, the additions were sustained.
5. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Income Tax (Appeals), who confirmed the order and dismissed the appeal. It is against the said order, the assessee preferred a second appeal to the Tribunal.
6. On consideration of the aforesaid materials, the Tribunal was of the view that when once the return was filed before the issue of notice and taxes due with interest is paid, as the income was not suppressed, the imposition of penalty was not proper. Therefore, it set aside the order of imposition of penalty. Aggrieved by the said order, the Revenue is in appeal.
7. The learned counsel for the Revenue assailing the impugned order contends that admittedly, the assessee admitted before the Central Excise Authorities the suppression of turn-over and the suppression of payment of excise duty. After the same was detected, he did not file the income-tax returns. He waited till there was a survey of his premises by the Income Tax Department. It is only thereafter he has filed the returns, ofcourse, before the issue of notice under Section 148 of the Act. These facts clearly demonstrates that the revised returns filed by the assessee is not voluntary and bona fide, and there was an intention to avoid payment of tax. In those circumstances, the Tribunal was not justified in interfering with the well-considered orders passed by the appellate authority as well as the original authority, and therefore, he submits that the impugned order requires to be interfered with.
8. In support of his contention, he relied upon a judgment of the Gujarat High Court in the case of LMP Precision Engg. Co. Ltd. v. Dy. CIT (Asstt.) [2011] 330 ITR 93/[2009] 183 Taxman 12, where it has been held as under:
“9. The law on the subject of treating a revised return of income as voluntary or otherwise is well- settled. Merely because a return is revised that fact by itself cannot lead to any presumption as to concealment in the original return of income, because legislature itself has provided for furnishing a revised return in case of any omission in the original return. Albeit such omission has to be inadvertent and bona fide. If the omission is intentional, the revised return cannot absolve an assessee. The fact that the Department has initiated certain inquiries per se would not be sufficient to treat the revised return as not being voluntary. This would depend on facts of each case considering the stage at which the investigation has progressed, the subject-matter of investigation by the Department, and the evidence available in the course of such investigation.”
9. There is no quarrel with the afore-said proposition of law. As is clear from the said law, in the background of the aforesaid law, we have to look into the facts of the case and then to apply the said law. Therefore, merely because there was a survey by the Income Tax Department and it is only after a survey, a revised return is filed, is not a ground to hold that there was suppression of income. In the instant case, first there was a search by the Excise Department. It is in the course of that search, the assessee admitted the suppression of turnover. Thereafter, he paid tax and interest to the Excise Department. Then, he went before the Settlement Commissioner seeking for waiver of penalty and prosecution. It is only after the order passed by the Settlement Commissioner and after the survey by the Income Tax Department of his premises, to bring it in conformity with the orders passed under the Excise Act, he filed the revised returns, paid the taxes as well as the interest It is thereafter the Revenue issued him the notice under Section 148 of the Act.
10. In reply to the same, he contended that the revised returns field may be treated as the returns in pursuance of the said notice and he pleaded before them that as he has already paid tax and interest, and as there is no suppression of income, he is not liable to pay the penalty.
11. The suppression of turnover is different from the suppression of income. If there is suppression of turn-over, there is liability to pay excise duty. Merely because the excise duty is paid, there is no presumption that it leads to taxable income in the hands of the assessee. The tax under the Income Tax Act is payable for the income in excess of the limit prescribed under the Act. It is in this context, after the Settlement Commissioner under the Excise Act resolved the dispute between the parties, which waived the penalty, then whether he had income or not, he was forced to file revised returns and then pay tax as well as the interest for delayed payment of tax. All this was done prior to issue of notice under Section 148 of the Act or may be after the survey was conducted by the Income Tax Department. That by itself would not lead to a conclusion that there was concealment of income, as rightly held by the Tribunal.
12. In that view of the matter, we do not find any substantial question of law which arise for consideration in the facts of the case. No merits. Dismissed.
