2012 (11) TMI 589 - HC - Income Tax

Penalty u/s 271(1)(c) - bogus claim of deduction under Section 35CCA - ITAT deleted the levy - Held that - Both the CIT (Appeals) and the Tribunal have not examined the facts of the present case in the manner expected of them & has merely based its conclusion on certain previous orders without any discussion of the facts of the present case. The question of concealment of income and whether the revised return was filed voluntarily or not is a question of fact to be examined and decided upon the facts and circumstances of the each case and, therefore, it was not permissible to the Tribunal to merely rely on earlier orders where this issue was considered and penalties were cancelled. At best, those earlier cases could only have a persuasive value. Thus the Tribunal has committed an error in upholding the order of the CIT (Appeals) cancelling the penalties, without assigning any valid reason and without examining the facts. As the cash book did not contain the name of the donee, though an entry had been made regarding the donation. Even in the donation account appearing in the assessee s ledger the name of the donee had not been entered when the survey was conducted on 06.10.1983 in the assessee s premises. The survey of the assessee s premises under Section 133A took place on 06.10.1983, two months prior to the date of filing the revised return. The survey itself was a result or as a follow up action to the searches and other inquiries conducted earlier. The proceeds of the donation cheque had already been taken out of the bank account which itself had been closed on 13.08.1982. In the light of these facts, the contention that the revised return was filed voluntarily is untenable. Reverse the order of the Tribunal and hold that the penalty under Section 271(1)(c) was rightly imposed - against the assessee.

Summary

Issues Involved:
1. Correctness of the Income Tax Appellate Tribunal's decision in deleting the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961.
2. Whether the revised return filed by the assessee was voluntary or prompted by the evidence collected by the Income Tax authorities.

Issue-wise Detailed Analysis:

1. Correctness of the Income Tax Appellate Tribunal's decision in deleting the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961:

The High Court scrutinized the Tribunal's decision, which had endorsed the CIT (Appeals) order cancelling the penalty imposed on the assessee. The Tribunal had relied on a previous order in the case of Deepak Singh and family, where the penalty was cancelled based on the filing of a revised return before concrete evidence was gathered by the income tax authorities. However, the High Court found that the Tribunal did not independently examine the facts of the present case but rather relied on previous orders without discussing the specific circumstances of the current case. The High Court emphasized that the question of concealment of income and the relevance of filing a revised return are fact-dependent and must be examined on a case-by-case basis. Consequently, the High Court held that the Tribunal committed an error by upholding the CIT (Appeals) order without assigning valid reasons and without a thorough examination of the facts.

2. Whether the revised return filed by the assessee was voluntary or prompted by the evidence collected by the Income Tax authorities:

The High Court examined the circumstances under which the revised return was filed by the assessee. The assessee initially filed a return claiming a deduction under Section 35CCA, which was later withdrawn in a revised return after a survey conducted by the income tax department revealed that the donation was bogus. The High Court noted that the revised return was filed on 05.12.1983, two months after the survey conducted on 06.10.1983, which impounded the assessee's cash book and collected evidence regarding the false claim. The High Court concluded that the revised return was not filed voluntarily but was prompted by the evidence collected by the income tax authorities. The Court emphasized that the filing of the revised return was an act of despair and did not exonerate the assessee from the guilt of concealment. The High Court also distinguished this case from other judgments cited by the assessee, noting that in those cases, the revised return was filed before any material was gathered by the authorities, whereas in the present case, the revised return was filed after the survey and collection of evidence.

Conclusion:

The High Court reversed the Tribunal's order and held that the penalty under Section 271(1)(c) was rightly imposed by the assessing officer. The substantial question of law was answered in favor of the Revenue and against the assessee. The penalty order passed by the assessing officer on 22.03.1993 was restored, and the appeal filed by the Revenue was allowed. The assessee was directed to pay the costs of the revenue, assessed at Rs.20,000/-.