2006 (5) TMI 83 - HC - Income Tax

Summary

Issues:
1. Justification of penalty under section 271(1)(c) for concealment of income.

Analysis:
The appellant, a building contractor, filed his income tax return for the assessment year, initially declaring a total income of Rs. 99,840. However, he failed to disclose the amount received from the Haryana State Agricultural Marketing Board. Subsequently, after a notice under section 148 of the Income-tax Act was issued, the appellant declared the income at Rs. 1,50,070. The final assessment was made at Rs. 2,00,300. The Income-tax Officer initiated penalty proceedings under section 271(1)(c) for concealment of income. The penalty was levied at 150% of the tax sought to be evaded. The Commissioner of Income-tax (Appeals) reduced the penalty to 100% of the tax sought to be evaded, resulting in a penalty of Rs. 50,200. The Tribunal upheld this decision, emphasizing that the appellant's claim of a mistake in accounting did not absolve him of concealment since showing less receipt itself indicated concealment.

The Tribunal found that the appellant's explanation of a mistake in accounting for not declaring the receipt from the Haryana State Agricultural Marketing Board was not a bona fide mistake. The lower authorities concluded that the appellant's act of showing less receipt amounted to concealment of income. Moreover, the final assessed income exceeded what was initially declared by the appellant in response to the notice under section 148 of the Act, indicating a clear intention to conceal income. Consequently, the Tribunal determined that there was no substantial question of law in the appeal and dismissed it.

In conclusion, the judgment underscores that the appellant's failure to disclose income, despite subsequent corrections, constituted concealment as per section 271(1)(c) of the Income-tax Act. The Tribunal's decision to uphold the penalty at 100% of the tax sought to be evaded was based on the finding that the appellant's actions demonstrated a deliberate attempt to conceal income, rather than a genuine mistake in accounting.