1991 (7) TMI 61 - HC - Income Tax

Summary

Issues involved: Assessment of total income, imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961, challenge before the Tribunal, satisfaction of the Income-tax Officer, reliance on original assessment order, independent findings by Inspecting Assistant Commissioner, validity of penalty imposition.

Assessment of Total Income: The registered firm filed its return for the assessment year 1969-70 declaring total income of Rs. 54,453, which was later assessed at Rs. 1,66,660 under section 143(3) of the Income-tax Act, 1961. The Appellate Assistant Commissioner set aside the initial assessment order and directed a fresh assessment, resulting in certain reliefs granted to the assessee.

Imposition of Penalty: The Inspecting Assistant Commissioner found discrepancies in the sales transactions of the assessee, concluding that inaccurate particulars of income were furnished and income was concealed. The penalty under section 271(1)(c) of the Act was imposed, which was challenged before the Tribunal. The Tribunal upheld the penalty, emphasizing the failure of the assessee to provide a satisfactory explanation for the suspicious transactions.

Satisfaction of the Income-tax Officer: The assessee contended that no satisfaction was recorded by the Income-tax Officer before issuing the penalty notice under section 271(1)(c). However, it was established that the requisite satisfaction was arrived at during the assessment proceedings, as evidenced by correspondence and opportunities given to the assessee to explain the discrepancies.

Reliance on Original Assessment Order and Independent Findings: The Inspecting Assistant Commissioner evaluated the evidence on record independently, concluding that the sales transactions were not genuine. The Tribunal concurred with these findings, emphasizing that penalty imposition was justified based on the peculiar circumstances of the case and the failure of the assessee to substantiate the genuineness of the transactions.

Validity of Penalty Imposition: The Tribunal's decision to uphold the penalty imposed by the Inspecting Assistant Commissioner was deemed lawful and based on the material on record. The court found no grounds for interference and answered the referred question in the affirmative, against the assessee. The reference was disposed of accordingly, with no costs awarded.