1990 (12) TMI 9 - HC - Income Tax

Summary

Issues:
1. Assessment of penalty under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1974-75.
2. Claimed deduction of interest under section 214 for the assessment year 1967-68 in the return of income for the assessment year 1974-75.
3. Disallowance of the claim for deduction of interest under section 214.
4. Appeal against the penalty order before the Commissioner of Income-tax (Appeals).
5. Tribunal's decision to cancel the penalty order under section 271(1)(c).
6. Reference to the High Court regarding the cancellation of the penalty order.

Analysis:

The case involved a reference under section 256(1) of the Income-tax Act, 1961, concerning the cancellation of a penalty imposed under section 271(1)(c) for the assessment year 1974-75. The dispute arose from the assessee's claim of deduction of interest under section 214 for the assessment year 1967-68 in the return of income for 1974-75. The Assessing Officer disallowed the deduction, leading to penalty proceedings under section 271(1)(c) for concealment and inaccurate particulars in the return.

The Commissioner of Income-tax (Appeals) upheld the penalty order, prompting the assessee to appeal before the Tribunal. The Tribunal found that the assessee had disclosed the interest particulars in the return and statement, thus canceling the penalty order. The High Court addressed the question of law regarding the cancellation of the penalty order, emphasizing that if the impugned income was not liable for assessment in the relevant year, the issue of concealment did not arise. The Court noted that the assessee had disclosed the interest income in question, leading to a lack of merit in the Revenue's contention.

Ultimately, the High Court upheld the Tribunal's decision to cancel the penalty order, ruling in favor of the assessee. The judgment highlighted the importance of disclosure and the relevance of the income's assessability in determining the validity of penalty imposition under section 271(1)(c) of the Income-tax Act, 1961.