2011 (6) TMI 750 - AT - Income Tax

Summary

Issues involved: Penalty u/s 271(1)(c) of the Income tax Act, 1961 for alleged concealment of income.

Facts leading to the appeal:
A search u/s 132 was conducted at the residence of a partner of a firm, revealing incriminating material. The firm filed its return of income showing business income. Penalty proceedings u/s 271(1)(c) were initiated, contending that the firm concealed income for the relevant year.

Arguments before CIT(A):
The CIT(A) deleted the penalty based on various grounds, including timely filing of return, payment of taxes, and disturbance caused by the search. The firm's books were audited, and no further additions were made by the Assessing Officer.

Revenue's grounds for appeal:
The Revenue challenged the deletion of penalty, arguing that no advance tax was paid, books were not found during the search, and income was only disclosed post-search.

Tribunal's analysis and decision:
The Tribunal noted that concealment of income and furnishing inaccurate particulars are distinct defaults requiring deliberate intent. The onus is on the Revenue to establish these conditions for penalty. Explanation 5 of section 271(1)(c) was crucial, as the income was revealed post-search and not intimated earlier.

Conclusion:
The Tribunal upheld the penalty, emphasizing that the firm concealed taxable income, which came to light only due to the search. The firm's actions indicated deliberate concealment, and the acceptance of returned income without enquiry did not absolve it from penalty. The penalty was confirmed, and the Revenue's appeal was dismissed.

Judgement:
The appeal filed by the Revenue against the deletion of penalty u/s 271(1)(c) was dismissed by the Tribunal, confirming the penalty imposed by the Assessing Officer for concealment of income.