1996 (1) TMI 56 - HC - Income Tax

Summary

Issues Involved:
1. Levy of penalty u/s 271(1)(c) for concealment of income.
2. Determination of whether the assessee concealed income of Rs. 43,389 or any part thereof.

Summary:

Issue 1: Levy of Penalty u/s 271(1)(c) for Concealment of Income
The Tribunal referred two questions to the High Court regarding the justification of a penalty of Rs. 43,389 u/s 271(1)(c) of the Income-tax Act, 1961. The assessee, running a lodging house, was found to have concealed income during a raid by the Income-tax Department. The Tribunal and the Appellate Assistant Commissioner had previously determined that the assessee had concealed income from bus parking charges, inflated salary expenses, and omitted rental income.

Issue 2: Determination of Concealed Income
1. Salary Disallowance (Rs. 8,067):
- The Tribunal found that Rs. 3,267 disallowed out of Rs. 11,667 claimed as salary was not concealed income due to lack of evidence.
- However, Rs. 4,800 disallowed out of Rs. 6,000 claimed as salary to the manager was considered concealed income as no evidence was provided, and the manager had stated he did not work during the relevant period.

2. Amenities Charges (Rs. 18,375):
- The Tribunal upheld that the assessee had omitted to disclose Rs. 18,375 received as amenities charges in the original and second returns. This was not considered a voluntary disclosure.

3. Parking Charges (Rs. 20,214):
- The Tribunal noted that the assessee admitted to receiving parking charges but did not disclose them in the initial returns. The claim that 80% of the receipts were paid as brokerage was unsubstantiated. The Tribunal concluded that Rs. 20,214 was concealed income.

High Court's Findings:
- The High Court agreed with the Tribunal on the concealment of Rs. 4,800 and Rs. 18,375, justifying the penalties.
- However, it found that the penalty for Rs. 20,214 was not justified as the original return did not conceal this amount, and the revised return was filed due to inadvertence.

Conclusion:
The High Court reframed the questions and concluded:
1. Penalties for Rs. 4,800 and Rs. 18,375 are justified and upheld.
2. Penalty for Rs. 20,214 is not justified and is set aside.

The questions were answered accordingly, with no order as to costs.