2005 (9) TMI 70 - HC - Income Tax

Summary

Issues:
Penalty under section 271(1)(c) - Exigibility in the present case.

Analysis:
The judgment pertains to a case where the Income-tax Appellate Tribunal referred a question of law regarding the exigibility of penalty under section 271(1)(c) for consideration. The assessee initially filed a return of income declaring a loss, which was later revised multiple times. The assessing authority initiated penalty proceedings due to alleged concealment of income. The assessee contended that the omission was due to the negligence of their power of attorney holder, a nationalized bank. The assessing authority imposed a penalty, which was upheld by the Commissioner of Income-tax (Appeals) but overturned by the Tribunal. The Revenue argued that the concealment of income was evident and shifted the blame on the bank, while the assessee maintained that there was no intention to evade tax. The High Court analyzed the sequence of events and the explanations provided.

The High Court observed that the assessee failed to disclose various incomes in the original return and subsequent revisions, despite being an engineer and a long-time taxpayer. The bank, acting as the power of attorney holder, clarified that they prepared the return based on information provided by the assessee and denied responsibility for the concealment. The Court noted that the assessee's claim of relying on the bank's preparation of the return was not credible, especially considering the subsequent revised returns that still did not disclose the income. The Court emphasized that the assessee's actions indicated an attempt to avoid penalty rather than genuine error.

The Court further highlighted that the assessee's approach of revising the income declaration only after the Settlement Commissioner's rejection of their petition raised suspicions about the intent behind the revisions. The Court concluded that the assessee's failure to disclose income initially could not be rectified by later revisions. Therefore, the Court held that the assessee could not be absolved of the obligation to provide accurate income particulars initially, and the Tribunal's decision was deemed contrary to the evidence on record. Consequently, the Court answered the question of law against the assessee and upheld the penalty.

In summary, the judgment delves into the issue of penalty under section 271(1)(c) concerning the concealment of income by the assessee. It scrutinizes the explanations provided by the assessee and the bank, ultimately concluding that the assessee's actions did not absolve them of the responsibility to disclose income accurately. The Court's decision highlights the importance of adhering to tax laws and providing truthful information in income declarations to avoid penalties for non-disclosure or concealment.