2011 (3) TMI 602 - HC - Income Tax

Penalty imposed u/s 271(1)(c) - Concealed income - The assessee is a Coaching Centre - During the course of survey, the assessee surrendered additional income and also filed revised return accordingly - The Assessing Officer accepted the revised return made by the assessee but also initiated penalty proceedingsThe surrender made by the assessee, a revised return was filed and which has been accepted as it is without making any alteration therein nor there was any adverse observation in the assessment order with regard to any discrepancies to correlate the same with the amount of surrender. - Held that - The Tribunal has recorded a categoric finding that there was no material to infer concealment of income or furnishing of inaccurate particulars - The contention that in every case where surrender is made inference of concealment of income must be drawn under Section 58 of the Evidence Act cannot be accepted - the case is not a fit case for levy of penalty.

Summary

Issues:
1. Penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2003-04.
2. Whether concealment of income was voluntary or consequent upon survey operation.

Analysis:
Issue 1: The appeal was filed by the revenue challenging the order of the Income Tax Appellate Tribunal regarding the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2003-04. The Tribunal set aside the penalty imposed by the Assessing Officer, citing that no concealment of income was detected during the survey operation. The Tribunal found that the additional income surrendered by the assessee was not due to concealment but to avoid harassment during the survey. The Tribunal emphasized that penalty should be imposed only in cases of deliberate default, not mere mistakes. The High Court upheld the Tribunal's decision, stating that no material supported the inference of concealment of income or furnishing of inaccurate particulars.

Issue 2: The main question was whether the disclosure of concealed income was voluntary or a result of the survey operation. The revenue argued that the concealment was rightly inferred and the penalty was justified. However, the Tribunal and the High Court disagreed, emphasizing that even voluntary surrender of concealed income does not automatically warrant a penalty if there is no evidence of deliberate default. The courts found that in this case, the revised return filed by the assessee was accepted without alterations or adverse observations, indicating no concealment or inaccuracies. The courts distinguished the judgment of the Madras High Court and concluded that no substantial question of law arose in this matter.

In conclusion, the appeal was dismissed, and the penalty imposed under section 271(1)(c) was set aside based on the lack of evidence supporting the inference of concealment of income or furnishing of inaccurate particulars. The judgment highlighted the importance of distinguishing between deliberate default and mere mistakes in determining the imposition of penalties under the Income Tax Act.