2012 (8) TMI 117 - HC - Income Tax

Penalty under Section 271 (1) (c) of the Act Held that - Record indicate the tampering of record on the part of the assessee - refund was only as a result of the manipulation by the assessee and the assessee has not paid any tax. It is precisely because of the refund, the problem arose for the assessee and concealment was detected by scrutiny against assessee

Summary

Issues:
1. Justification of levy of penalty under Section 271(1)(c) of the Income Tax Act for the assessment years 2000-01, 2001-02, and 2002-03.
2. Confirmation of penalty by the Tribunal.
3. Absence of recording of satisfaction by the assessing officer before levying penalty.
4. Confirmation of penalty despite no revenue loss and resulting assessments in refund.

Analysis:

Issue 1: Justification of levy of penalty under Section 271(1)(c)
The appeal concerns the assessment years 2000-01, 2001-02, and 2002-03, where discrepancies were found between the income disclosed by the assessee and the actual income received from Civil Contract activities. The Assessing Officer noted that the assessee tampered with TDS certificates to reduce tax liability and seek refunds based on the altered figures. Consequently, penalties of Rs. 33,187/-, Rs. 96,732/-, and Rs. 5,987/- were levied for the respective years under Section 271(1)(c) of the Act.

Issue 2: Confirmation of penalty by the Tribunal
The Tribunal confirmed the penalties, leading to the appeal before the High Court. The appellant questioned the justification of confirming the penalties under Section 271(1)(c) in light of the discrepancies and the tampering of TDS certificates. The appellant contended that cooperation with the revenue and ignorance should preclude the imposition of penalties.

Issue 3: Absence of recording of satisfaction by the assessing officer
The appellant raised concerns about the absence of any recording of satisfaction by the assessing officer before levying penalties under Section 271(1)(c). This procedural aspect was crucial in determining the validity of the penalties imposed on the assessee.

Issue 4: Confirmation of penalty despite no revenue loss and resulting assessments in refund
Despite the absence of revenue loss and the assessments resulting in refunds, the penalties were confirmed by the Tribunal. The appellant argued that the refunds were due to the manipulation by the assessee and not due to legitimate income declarations, leading to the detection of concealment through scrutiny.

In conclusion, the High Court dismissed the appeal, upholding the penalties imposed under Section 271(1)(c) for the assessment years in question. The court found that the tampering of records and concealment of income by the assessee warranted the penalties, despite explanations of ignorance and illiteracy. The court emphasized that the refunds were a result of the manipulation by the assessee, leading to the detection of concealment, and thus, found no merit in interfering with the penalties imposed.