2004 (4) TMI 27 - HC - Income Tax

Penalty revised returns had not been filed voluntarily and there had been concealment of credits - Assistant Commissioner of Income-tax while accepting the revised returns, initiated penalty proceedings u/s 271(1)(c) - appellants filed reply submitting that the additional income had been disclosed voluntarily to get the benefit under section 273A - However, the Assistant CIT passed orders imposing penalty holding that the revised returns had not been filed voluntarily and there had been concealment of credits which were sought to be disclosed in the revised returns. - As a matter of fact, in the reply to the notice u/s 271(1)(c), the appellants did not offer any credible explanation indicating the reasons for which the amount had not been disclosed in the original returns. - Tribunal was justified in holding that there was concealment warranting levy of penalty under section 271(1)(c)

Summary

Issues:
1. Assessment of penalty under section 271(1)(c) of the Income-tax Act for concealment of income.
2. Voluntariness of filing revised returns and alleged concealment of income.

Analysis:

Issue 1: Assessment of penalty under section 271(1)(c) of the Income-tax Act for concealment of income:
The case involved partnership concerns deriving income from timber and tiles, with a dispute concerning assessment years 1986-87 to 1991-92. The appellants initially filed returns for these years, showing certain income. Subsequently, during the assessment proceedings for 1991-92, the Assessing Officer issued a questionnaire seeking details, to which the appellants replied on March 2, 1992. The appellants then filed revised returns for the years in question and paid tax accordingly. The Assistant Commissioner of Income-tax initiated penalty proceedings under section 271(1)(c) of the Act, alleging concealment. The Commissioner of Income-tax (Appeals) allowed the appeals and canceled the penalty, citing voluntary disclosure following a Supreme Court decision. However, the Appellate Tribunal later allowed the Department's appeal, concluding that the additional income disclosed in the revised returns was not voluntary. The Tribunal found that the revised returns were filed only after the Department's actions, indicating a lack of bona fide intention.

Issue 2: Voluntariness of filing revised returns and alleged concealment of income:
The appellants raised questions of law regarding the Tribunal's findings on concealment and voluntariness of filing returns. The Tribunal's decision was based on the timing of the revised returns in relation to the Department's actions, suggesting a lack of voluntary disclosure. The Tribunal found that the revised returns were not filed in good faith but to avoid consequences. The court noted that the appellants failed to provide a credible explanation for not disclosing the income in the original returns. The court upheld the Tribunal's decision, emphasizing that there was no substantial evidence to support a different conclusion. Consequently, all questions were answered against the assessee, affirming the Tribunal's ruling on concealment and voluntariness of filing revised returns.

In conclusion, the court upheld the Tribunal's decision, emphasizing the lack of voluntary disclosure in filing the revised returns and the absence of credible explanations for the non-disclosure of income. The judgment highlights the importance of bona fide intentions in tax filings and the consequences of concealment under section 271(1)(c) of the Income-tax Act.