2004 (1) TMI 23 - HC - Income Tax

Imposition of penalty under section 271(1)(c) quantum of penalty - assessee attempted to question the quantum of penalty imposed - This was a dispute that was not raised by the assessee at any time either before the Commissioner of Income-tax or before the Income-tax Appellate Tribunal - Department also submitted that the quantum of penalty was proper and it could not be said to be excessive or not permitted by law. In the circumstances of the case and in the absence of the plea being raised earlier we are not in a position to find any merit in this contention regarding the quantum of penalty imposed.

Issues Involved:
1. Legality and validity of the imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961.
2. Whether the assessee concealed income or furnished inaccurate particulars.
3. The acceptability of the assessee's explanation regarding the non-inclusion of specific income amounts.
4. The justification for the quantum of penalty imposed.

Detailed Analysis:

1. Legality and Validity of the Imposition of Penalty:
The primary issue was whether the imposition of a penalty amounting to Rs. 2,20,000 under section 271(1)(c) of the Income-tax Act was legal and valid. The court examined the circumstances under which the penalty was imposed, noting that the assessee had shown a sum of Rs. 2,96,575 as due to sundry creditors, which was actually received income. Additionally, Rs. 46,464 was not accounted for due to the non-receipt of the TDS certificate. The Assessing Officer initiated penalty proceedings for the concealment of these amounts, totaling Rs. 3,43,239. The Tribunal upheld the penalty, finding that the assessee's explanations were not bona fide.

2. Concealment of Income or Furnishing Inaccurate Particulars:
The court evaluated whether the assessee had concealed income or furnished inaccurate particulars. The assessee argued that the sum of Rs. 2,96,575 was included in the revised return and that the omission of Rs. 46,464 was due to the non-receipt of the TDS certificate. However, the Tribunal found that the explanation for both amounts was not acceptable. The Tribunal noted that the TDS certificate for Rs. 46,464 was received before the filing of the second revised return, yet the amount was still not disclosed. The explanation of following a "completed project basis" for Rs. 2,96,575 was also not substantiated.

3. Acceptability of the Assessee's Explanation:
The assessee's explanations were scrutinized in detail. The explanation for Rs. 2,96,575 was that it was shown as a sundry creditor due to the project completion method, which was not accepted by the Tribunal. For Rs. 46,464, the non-receipt of the TDS certificate was cited, but the Tribunal found that the certificate had been received before the second revised return was filed. The court concurred with the Tribunal that these explanations were not bona fide and were mere afterthoughts.

4. Justification for the Quantum of Penalty:
The court also addressed the issue of the quantum of penalty imposed. The assessee's counsel attempted to question the quantum, but this objection had not been raised before the Commissioner of Income-tax or the Tribunal. The court found no merit in the contention regarding the quantum, noting that it was not excessive or not permitted by law. The penalty was deemed appropriate given the circumstances and the lack of any earlier plea regarding its quantum.

Conclusion:
The court concluded that the imposition of the penalty was justified and supported by section 271(1)(c) of the Act. The explanations offered by the assessee were not found acceptable, and the Tribunal's findings were upheld. The question referred to the court was answered in the positive, in favor of the Department and against the assessee, with no order as to costs.

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