2003 (1) TMI 60 - HC - Income Tax

Whether the Appellate Tribunal is right in law in confirming the penalty only in respect of an amount of Rs. 31, 000 and thereby cancelling the balance penalty levied under section 271(1)(c) of the Income-tax Act 1961 ? - The assessee admitted that he had purchased the car for Rs. 31, 000 and therefore that was a valid basis on which the Tribunal held that there admittedly was concealment of income to the tune of Rs. 31, 000. As regards the amount which was in excess of Rs. 31, 000 the Tribunal has found that it was a mere estimate by the Income tax Officer while fixing the amount that went into the purchase of the car. The finding of the Tribunal that the amount which was in excess of Rs. 31, 000 involved a factor of estimate on the basis of lack of evidence cannot be said to be a perverse or unreasonable finding. The question referred to us is therefore answered in the affirmative against the Revenue and in favour of the assessee.

Summary

Issues: Interpretation of penalty under section 271(1)(c) of the Income-tax Act, 1961 based on concealment of income in relation to the purchase of a car.

Analysis:
The case involved a dispute regarding the imposition of a penalty under section 271(1)(c) of the Income-tax Act, 1961 on the assessee for concealing income related to the purchase of a car. The assessee had failed to disclose the source of income used to acquire the vehicle, leading to an addition of Rs. 65,000 to the total income, later reduced to Rs. 56,000 by the Commissioner of Income-tax (Appeals). The Income-tax Officer imposed a penalty equal to 100% of the concealed income, amounting to Rs. 56,000. However, the Commissioner (Appeals) overturned this decision, stating that the onus was on the Income-tax Officer to prove that the investment in the car involved concealed income of the assessee for that year. The Commissioner emphasized that the penalty should be examined within the framework of section 271(1)(c) without solely relying on the Explanation to the section.

The Tribunal disagreed with the Commissioner (Appeals) and upheld the penalty, stating that the Explanation to section 271(1)(c) applied, shifting the burden to the assessee to provide evidence to rebut the presumption of concealment. The Tribunal found that the income used to purchase the car was indeed from the relevant year and that the asset belonged to the assessee. The dispute centered on the valuation of the car, upheld at Rs. 56,000, while the actual purchase price was Rs. 31,000. The Tribunal concluded that there was concealment of income amounting to Rs. 31,000, as admitted by the assessee, and upheld the penalty only in relation to this amount, modifying the Commissioner's order accordingly.

The High Court, in its judgment, affirmed the Tribunal's decision, emphasizing that the Explanation to section 271(1)(c) applied in this case. The Court clarified that while the presumption of concealment arose under the Explanation, it was rebuttable by the assessee. The Court agreed with the Tribunal's findings that there was concealment of income of Rs. 31,000, as admitted by the assessee, and that the remaining amount was an estimate by the Income-tax Officer. Therefore, the Court upheld the penalty only in respect of Rs. 31,000, cancelling the balance penalty imposed under section 271(1)(c) of the Income-tax Act, 1961. The judgment was delivered in favor of the assessee, concluding the matter with no order as to costs.