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2010 (5) TMI 576 - HC - Income TaxPenalty u/s 271(1)(c) - Scrutiny - Undisclosed income - While moving application for voluntary disclosure, the assessee must disclose the correct facts, instead of making a ground on false pretext - There has been no trans- action of share of Sri Niwas Leasing and Finance Ltd. in the Delhi Stock Exchange during the period in question. There has been no sale and pur- chase of shares by M/s. S. J. Capital Ltd. between May 15, 2003 and May 21, 2003. Thus, the assessee had not approached the Assessing Officer with the clean hand - The manner in which the assessee has tried to prolong the case before the Assessing Officer by not providing information immediately and narrating incorrect facts in the letter dated December 6, 2006 shows that the assessee has deliberately concealed the income and disclosure was not voluntary but under compulsion being cornered by the Assessing Officer - Held that disclosure by the assessee does not seem to be voluntary and bonafide but under compulsion. The assessee has not furnished correct information while moving the letter dated December 6, 2006 with unclean hand - Decided against the assessee
Issues Involved:
1. Penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961. 2. Voluntary disclosure of income. 3. Concealment of income and inaccurate particulars. 4. Burden of proof and bona fide explanation. 5. Legal precedents and interpretations regarding penalty under section 271(1)(c). Issue-wise Detailed Analysis: 1. Penalty Proceedings under Section 271(1)(c) of the Income-tax Act, 1961 The appeal concerns the imposition of a penalty under section 271(1)(c) of the Income-tax Act for the assessment year 2004-05. The Assessing Officer treated an addition of Rs. 61,35,844 as income from undisclosed sources and charged interest under sections 234A and 234B, issuing notices for penalty under section 271(1)(c). 2. Voluntary Disclosure of Income The assessee claimed that the disclosure of income on December 6, 2006, was voluntary, citing non-cooperation from the share broker, M/s. S. J. Capital Ltd., which led to the surrender of income to maintain peace with the Department. However, the court found that the disclosure was not voluntary but made under compulsion, as the assessee was cornered by the Revenue. 3. Concealment of Income and Inaccurate Particulars The court noted that the assessee did not provide the required information promptly and attempted to evade furnishing details. The Delhi Stock Exchange's communication indicated no trading of the concerned shares by M/s. S. J. Capital Ltd., contradicting the assessee's claims. This led to the conclusion that the assessee had not approached the Assessing Officer with clean hands and had concealed income. 4. Burden of Proof and Bona Fide Explanation The burden of proving concealment of income lies on the Revenue. The court referred to various precedents, including CIT v. Suresh Chandra Mittal and CIT v. M. M. Gujamgadi, which state that penalty cannot be imposed unless the explanation of the assessee is not bona fide. In this case, the court found the assessee's explanation to be neither bona fide nor voluntary. 5. Legal Precedents and Interpretations Regarding Penalty under Section 271(1)(c) The court discussed several legal precedents: - CIT v. Aggarwal Pipe Co.: Bona fide surrender of cash credit does not entail penalty. - CIT v. M. M. Gujamgadi: Addition of income does not automatically attract penalty unless the explanation is not bona fide. - CIT v. Mohinder Singh: Quantum of penalty depends on the amount of income concealed. - Union of India v. Dharamendra Textile Processors: Penalty under section 271(1)(c) is a civil liability, and mens rea is not necessary. - CIT v. Atul Mohan Bindal: Imposing penalty under section 271(1)(c) does not require mens rea, as it is a civil liability. Conclusion The court concluded that the Tribunal erred in cancelling the penalty of Rs. 18,35,000 levied under section 271(1)(c), as the disclosure by the assessee was not voluntary but made under compulsion. The appeal was allowed, and the question was answered in favor of the Revenue, reinstating the penalty.
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