2007 (7) TMI 21 - HC - Income Tax

Penalty - Revenue contended that assessee himself has disclosed the additional amounts for impugned AY and also failed to prove the genuineness of loan credits accounted and accordingly penalty imposed on him - Held that revenue failed to prove the concealment and penalty set aside

Summary

Issues:
- Interpretation of Section 271(1)(c) of the Income Tax Act, 1961 regarding the levy of penalty for concealment of income.
- Assessment of additional income offered by the assessee subsequent to notice u/s 148.
- Justification of penalty levied by the Assessing Officer under Section 271(1)(c).
- Applicability of the Tribunal's decision in the assessee's own case to the present appeals.
- Determination of concealment of income and the authority's discretion to levy a penalty.

Analysis:
1. The appeals under Section 260A of the Income Tax Act, 1961 were filed by the Revenue against the order of the Income Tax Appellate Tribunal, Chennai Bench 'B', Chennai. The primary issue raised was whether the Tribunal was correct in holding that the concealment of income was not proved for the purpose of levying penalty u/s 271(1)(c) when the assessee himself could not prove the same and offered it for assessment only after receiving notice u/s 148.

2. The facts leading to the substantial question of law involved the assessment years 1997-98 and 1998-99. The assessee filed returns of income for both years, admitting certain amounts. Subsequently, notice under Section 148 was issued, and the assessee filed revised returns offering additional income. The Assessing Officer then issued notices under Section 271(1)(c) for levying penalties, which were contested by the assessee. The penalties were imposed, leading to appeals to the Commissioner of Income-tax (Appeals) and then to the Tribunal.

3. The Revenue contended that the assessee's disclosure of additional amounts and failure to prove the genuineness of the loan credits justified the penalty under Section 271(1)(c). However, the Tribunal, following its earlier order in the assessee's own case, emphasized the necessity of a definite finding of concealment in the penalty order and the discretion of the authority to levy a penalty only if concealment is established.

4. The Tribunal's decision in the present appeals reiterated that concealment had not been proven by the authorities below. The Tribunal held that the concealment issue was a question of fact, and the authorities failed to provide evidence of concealment. Citing the Supreme Court's decision in T.Ashok Pai Vs. Commissioner of Income-tax, the Tribunal concluded that it was the highest authority to determine factual questions and found no legal infirmity in its decision to delete the penalties.

5. Ultimately, the High Court dismissed the tax cases, stating that no substantial question of law arose for consideration. The Court upheld the Tribunal's decision, noting that the reasons given were based on valid evidence, and there was no error warranting interference. The Court highlighted that the Tribunal's finding of no concealment was conclusive, and the Revenue had not appealed against the earlier order, affirming the correctness of the Tribunal's decision.