2004 (10) TMI 38 - HC - Income Tax

Penalty - Whether Tribunal was correct in confirming the penalty on the ground of concealment of Rs. 15, 000 under section 271(1)(c)? - The concealment had already been detected by the Income-tax Officer at the time when the return declaring nil income was filed. Even otherwise no benefit can be derived from the mere fact that the applicant had filed a revised return declaring her income at Rs. 15, 000. Since the Explanation to section 271(1) of the Act as inserted by the Finance Act 1964 was clearly attracted the onus was on the applicant to prove that there was no fraud or any gross or wilful neglect on her part and it was not deliberate. The applicant having failed to do so the penalty had rightly been imposed.

Summary

Issues:
1. Whether the penalty imposed by the Income-tax Officer was illegal as it was passed with the approval of the Inspecting Assistant Commissioner?
2. Whether the penalty for concealment of income was correctly upheld by the Income-tax Appellate Tribunal?

Analysis:

Issue 1:
The case involved a lady assessed for income tax in the status of an individual for the assessment year 1973-74. The Income-tax Officer initiated penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961. The penalty was imposed with the approval of the Inspecting Assistant Commissioner. The applicant argued that she disclosed income in a revised return under the assurance that no penal action would be taken. However, the court found that the penalty was not a consequence of any order or direction from the Inspecting Assistant Commissioner. The court deemed question 1 as academic, as the Income-tax Officer had applied independent discretion in imposing the penalty.

Issue 2:
The applicant initially filed a return declaring nil income but revised it after being confronted about the source of investment in a property. The court noted that the applicant deliberately provided inaccurate particulars and concealed income. The court discussed the impact of the Explanation to section 271(1)(c) of the Act, which shifted the burden of proof to the assessee to show no fraud or neglect. Previous court decisions were cited to emphasize the burden on the assessee to disprove concealment. The court highlighted that the revised return filed by the applicant did not absolve her of concealment, as the original return was non-revisable. The court upheld the penalty, stating that the applicant failed to prove the absence of fraud or neglect, as required by the Explanation to section 271(1)(c) of the Act.

In conclusion, the court answered issue 2 in favor of the Revenue, upholding the penalty for concealment of income. However, question 1 was left unanswered, and no costs were awarded in the case.