1995 (7) TMI 21 - HC - Income Tax

Summary

Issues:
1. Validity of penalty amount imposed for concealment of income.
2. Applicability of penalty under section 271(1)(c) for each assessment year.
3. Validity of penalty on defunct Hindu undivided family.

Analysis:

Issue 1: Validity of penalty amount imposed for concealment of income
The case involved the Commissioner of Income-tax requesting the Tribunal to refer questions regarding the validity of the penalty amount imposed for concealment of income. The assessee, a Hindu undivided family, had disclosed concealed business income from a mill for assessment years 1968-69 to 1975-76. The Commissioner determined the income to be assessed at Rs. 10 lakhs, spread equally over the assessment years. The assessments were accepted by the assessee, who later petitioned for waiver of total penalties of Rs. 10 lakhs under section 271(1)(c) of the Income-tax Act. The Tribunal held that the amount for concealment was Rs. 6.44 lakhs in aggregate, reducing the penalty from Rs. 1,25,000 to Rs. 80,000 for each assessment year.

Issue 2: Applicability of penalty under section 271(1)(c) for each assessment year
The Tribunal, while agreeing with the Department on levying the penalty for concealment, differed on the quantum of penalty. It concluded that the penalty for each assessment year should be Rs. 80,000, not Rs. 1,25,000 as imposed by the Income-tax Officer. The Tribunal based its decision on the facts of each assessment year. Referring to the Supreme Court case of Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705, the Tribunal emphasized the importance of considering all facts and admissions made by the appellant in determining the penalty amount.

Issue 3: Validity of penalty on defunct Hindu undivided family
The assessee contended that the penalty on the defunct Hindu undivided family was not valid in law. However, the Tribunal rejected this contention, stating that the levy and collection of penalty up to and inclusive of the assessment year 1975-76 were legal and in order. It further clarified that the penalty for each assessment year should be imposed with reference to the income concealed, not the amount of tax sought to be evaded.

In conclusion, the Tribunal dismissed the Commissioner's request to refer questions of law, as it found no referable question arising from the order. The Tribunal's decision to reduce the penalty amount for each assessment year was based on the facts of the case, aligning with the principles laid down by the Supreme Court regarding penalty imposition for concealment of income.