2010 (11) TMI 131 - AT - Income Tax

Penalty - contention of assessee that disclosure is voluntary and was to buy peace - Interest income was credited in the account of assessee on various dates and TDS was deducted on payment of such interest - Held that - Onus is heavily on the assessee and his son to lay evidence before the Assessing Officer or before the ld. CIT(A) or before us that return of income by son was filed without the knowledge of the assessee and son of the assessee had no occasion to discuss the details of what has been filed in the return and that assessee had also no occasion to disclose to the son the fact of making of FDR and interest earned thereon - Notwithstanding it is the duty of the power of attorney holder to enquiry and collect all the material facts before filing of the return on behalf of the assessee - May be the return was filed as claimed by the power of attorney holder Shri Hemu Shah the son of the assessee there is clearly a non-disclosure of investment in FDs and interest income therefrom If an assessee is exempted from levy of penalty solely on the ground that his agent power of attorney holder or guardian filing return on his behalf is not aware about correct income or investment liable to be taxed as claimed in the present case then a disorderly condition is likely to emerge where tax payers will be prompted to file untrue return through their agent power of attorney holder or guardian without there being any accountability of any one. Revised Return - return filed under section 139(5) alone can be said to be a revised return. Since time limit for filing return under section 139(5) had expired on 31-3-08 the return filed on 10-6-08 cannot be validly called a revised return. - Voluntary Discloser - The return filed on 10-6-2008 cannot be said to be voluntary. Primarily such return is not valid return under section 139(5) and at best it can be treated as an information under the signature of the assessee submitted to the department. Even such information cannot be said to be voluntary because it was submitted when assessee was served notice under section 142(1) and also a letter dated 12-5-2008. Satisfactory Explanation u/s 273 - The explanation furnished by the assessee before the Assessing Officer in assessment proceedings as well as in penalty proceedings was that he is a senior citizen of the age of 70 years and he was sick hospitalized and his return was filed by his son as power of attorney holder - In the present case it is not shown that power of attorney holder was not aware about the deposits in the bank and interest earned thereon - There is no information as to what happened between 7-3-2006 and 30-11-2006 or thereafter till 31-3-2008 and why he could not declare the investment and interest therefrom- explanation furnished by the assessee is devoid of acceptance as it is not found satisfactory. As a result we hold that assessee has concealed the particulars of income by not declaring unaccounted investment in bank to the extent of Rs. 22, 78, 000 and by not declaring the interest income thereon amounting to Rs. 4, 46, 379 - Decided in the favour of the revenue

Issues Involved:
1. Legality of the penalty levied under section 271(1)(c) for the Assessment Year 2006-07.
2. Whether the appellant deliberately concealed particulars of income.
3. Validity and voluntariness of the revised return filed by the appellant.
4. Satisfaction of the Assessing Officer regarding concealment of income.
5. Mens rea (guilty mind) involved in the case.
6. Disclosure of material facts in the original return.
7. Applicability of cited legal precedents.

Detailed Analysis:

I. Legality of the Penalty under Section 271(1)(c):
The appellant contested the penalty of Rs. 9,30,805 levied by the Assessing Officer, confirmed by the CIT(A), arguing it was unlawful and against the principles of natural justice. The Tribunal found that the appellant failed to disclose significant interest income and investments, leading to the penalty's affirmation.

II. Deliberate Concealment of Income:
The appellant's original return showed interest income of Rs. 129, while the actual interest was Rs. 4,46,379. Additionally, an investment of Rs. 22,78,000 in fixed deposits was not disclosed. The Tribunal concluded that the appellant had deliberately concealed these particulars, as the non-disclosure was not justified by the appellant's health or the involvement of his son in filing the return.

III. Validity and Voluntariness of the Revised Return:
The Tribunal held that the revised return filed on 10-6-2008 was neither valid nor voluntary. It was filed beyond the statutory time limit under section 139(5) and after the Assessing Officer had issued a show-cause notice. The return was thus a response to the department's detection of concealment, not a voluntary correction.

IV. Satisfaction of the Assessing Officer:
The Tribunal found that the Assessing Officer had adequately recorded satisfaction regarding the appellant's concealment of income. The assessment order explicitly mentioned the concealment and the initiation of penalty proceedings, fulfilling the requirement of satisfaction.

V. Mens Rea Involved:
The Tribunal determined that the appellant's actions involved mens rea. The appellant was aware of the undisclosed investments and interest income but failed to declare them. The Tribunal rejected the argument that the appellant's illness or his son's lack of knowledge justified the non-disclosure.

VI. Disclosure of Material Facts:
The Tribunal concluded that the appellant did not disclose all material facts in the original return. The significant investment and interest income were crucial for computing the correct income, and their omission constituted a contumacious conduct warranting penalty under section 271(1)(c).

VII. Applicability of Cited Legal Precedents:
The Tribunal reviewed several legal precedents cited by the appellant, including decisions in CIT v. Nuruddin & Brothers, Sir Shadilal Sugar & General Mills Ltd. v. CIT, and others. The Tribunal found these cases inapplicable due to changes in the law and differences in facts. The cited cases pertained to earlier assessment years and did not align with the current legal framework.

Conclusion:
The Tribunal upheld the penalty of Rs. 9,30,805, dismissing the appeal. The appellant's failure to disclose significant income and investments, the invalid and non-voluntary nature of the revised return, and the presence of mens rea justified the penalty under section 271(1)(c). The explanation provided by the appellant was deemed unsatisfactory, and the legal precedents cited were found inapplicable.

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