2011 (8) TMI 15 - HC - Income Tax

Penalty - Income escaping assessment - Reassessment - since there was a difference in tax of Rs.1,98,582/- between the original return and return dated May 7, 2007 filed in course of reassessment proceedings, tax on income to the extent of the said amount was concealed warranting invocation of penalty @ 100% and consequently, the appellant was served with a demand notice under Section 156 of the Act - on a plain reading of the aforesaid Section it is clear that for application of Section 271(1) (c) of the Act, all that is necessary is that either there must be concealment of income or inaccurate particulars of such income - If an employee does not disclose the salary of 8 months and shows only the salary of 4 months in a year notwithstanding the fact that he worked as employee for full 12 months, such act definitely comes within the meaning of concealment so as to attract the aforesaid provision - There is also no reason to interfere with the quantum of penalty as only an amount equivalent to 100% of the tax evaded has been imposed where as the maximum amount is 300% - Decided against the assessee

Summary

Issues:
Assessment of undisclosed income and initiation of penalty proceedings under the Income-tax Act, 1961 for Assessment Year 2001-2002.

Analysis:
The case involves an individual appellant assessed for tax under the Income-tax Act, arising from the appellant's failure to disclose income earned from a former employer while changing jobs during the relevant period. The appellant omitted to include the gross income earned from the former employer in the return, despite TDS deductions made by the former employer. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act due to the appellant's failure to disclose the income, leading to reassessment and imposition of penalty at 100% for alleged concealment of income. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal upheld the penalty imposed by the Assessing Officer.

The Division Bench of the Calcutta High Court framed the substantial question of law regarding the justification of the penalty under Section 271(1)(c) of the Act for a bona fide or inadvertent mistake by the appellant. The Court analyzed the provisions of Section 271(1)(c) and emphasized that the intention to deceive is irrelevant for the application of the penalty. The Court cited the Supreme Court's interpretation of the section, highlighting the importance of accurate particulars in the filed return and the necessity of mens rea for penalty imposition. The Court concluded that the appellant's failure to disclose income from the former employer amounted to concealment, attracting the provisions of Section 271(1)(c) of the Act.

The Court dismissed the appellant's appeal, affirming the Tribunal's decision to uphold the penalty imposed by the Assessing Officer. The Court clarified that the appellant's alleged bona fide intention or inadvertent mistake was not a relevant factor in determining the penalty under Section 271(1)(c). The Court held that the Tribunal's decision was justified and not arbitrary, unreasonable, or perverse. The Court refrained from considering mala fide intention or mens rea of the appellant, stating it was beyond the scope of the proceeding. No costs were awarded in the circumstances of the case.