2004 (11) TMI 69 - HC - Income Tax

Levy of penalty u/s 271(1)(c) - We find that the returned income was less than 80 per cent, of the assessed income as finally determined by the Tribunal. To the show-cause notice issued, for the reason best known, the applicant did not submit any reply. The Explanation to section 271(1)(c) of the Act was applicable and, therefore, the inference that the applicant had concealed the particulars of his income has rightly been drawn. In this view of the matter, the Tribunal has not committed any illegality in upholding the imposition of penalty.

Summary

Issues:
Imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1975-76.

Analysis:
The judgment delivered by the High Court of ALLAHABAD pertains to the imposition of a penalty under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1975-76. The Income-tax Appellate Tribunal, Delhi, referred the question of law regarding the correctness of upholding a penalty of Rs. 6,000 under section 271(1)(c) for the mentioned assessment year. The case involved the applicant, an individual, who had initially returned an income of Rs. 13,049, which was later determined by the Income-tax Officer to be Rs. 25,060, including an addition of Rs. 12,000 related to business income from M/s. Jindal Textiles. The Tribunal reduced this addition to Rs. 6,000. Subsequently, penalty proceedings were initiated, and despite the applicant not providing any reply or cause for the penalty, the Income-tax Officer imposed a penalty of Rs. 12,000 under section 271(1)(c), which was later reduced to Rs. 6,000 by the Appellate Assistant Commissioner and upheld by the Tribunal.

The High Court considered the fact that the returned income was less than 80% of the assessed income finally determined by the Tribunal. The applicant's failure to respond to the show-cause notice, coupled with the applicability of the Explanation to section 271(1)(c) of the Act, led to the inference that the applicant had concealed income particulars. Consequently, the Court found that the Tribunal did not commit any illegality in upholding the imposition of the penalty. Therefore, the Court answered the question referred in the affirmative, favoring the Revenue and ruling against the assessee. The judgment concluded without any order as to costs.

In summary, the High Court upheld the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1975-76, based on the applicant's failure to respond to the show-cause notice and the discrepancy between the returned income and the assessed income. The Court found the inference of income concealment to be justified, leading to the affirmation of the penalty upheld by the Tribunal.