2013 (12) TMI 201 - HC - Income Tax

Concealment of income - Held that - It appears from the order passed by the AO that there are no losses of earlier years which the assessee has set off against its income - All the returns filed by the assessee in earlier years have either been treated as non-est or the losses if any have already been set off - The assessee has furnished the false information pertaining to the income and thereby is liable to levy the tax on the amount of Rs.29,91,572/-. Thus, concealment is willful and the assessee has also furnished the inaccurate details of the income The AO had examined and verified the issue regarding earlier years. There was no loss in the earlier year, which was supposed to be carried forward - The assessee has failed to bring any material on record to prove that losses were carried forward from the earlier years - There was malafide intention on furnishing the false particular Following CIT vs. Ananthan Chattier 2003 (12) TMI 12 - MADRAS High Court - The burden always lies with the assessee to prove that there was no concealment Decided in favour of Revenue.

Summary

Issues:
Appeal against cancellation of penalty under Section 271(1)(c) of the Income-Tax Act, 1961 for the assessment year 1998-99.

Detailed Analysis:

1. Substantial Questions of Law:
The appellant-assessee filed an appeal under Section 260A of the Income-Tax Act, 1961 against the cancellation of penalty under Section 271(1)(c) for the assessment year 1998-99. The substantial questions of law admitted by the Coordinate Bench of the High Court included the justification of penalty imposition based on rejection of bonafide claims for setting off unabsorbed depreciation/losses and whether such rejection constitutes material concealment of income. The case involved the appellant's claim for setting off losses against profits, which was rejected by the Assessing Officer.

2. Background and Assessment Proceedings:
The appellant had filed its return of income for the assessment year 1998-99, showing a net profit set off against unabsorbed losses/depreciation from earlier years. The Assessing Officer rejected the claim for set off and disallowed a deduction towards Group Gratuity Scheme. The CIT(A) partially allowed the appeal, directing the computation of losses and initiation of penalty proceedings under Section 271(1)(c). The Tribunal later partly allowed the revenue's appeal, restoring the penalty order. The appellant challenged this in the High Court.

3. Arguments and Analysis:
The appellant's counsel argued that the penalty lacked a basis of concealment or furnishing false particulars, citing precedents emphasizing the distinction between quantum and penalty proceedings. However, the Department's counsel supported the penalty order based on the appellant's false information regarding losses set off against income. The Tribunal upheld the penalty, noting the absence of actual losses carried forward from earlier years for set off.

4. Legal Precedents and Conclusion:
The Tribunal's decision was supported by legal precedents emphasizing the burden on the assessee to prove no concealment. The High Court upheld the penalty, citing cases where malafide intention in furnishing false particulars justified penalty imposition. The judgment highlighted that mens rea is not essential for civil penalties, and the AO's satisfaction during assessment suffices for initiating penalty proceedings. The High Court dismissed the appeal, affirming the Tribunal's decision and finding no reason to interfere with the penalty order.

In conclusion, the High Court upheld the penalty under Section 271(1)(c) against the appellant-assessee for the assessment year 1998-99, based on the findings of concealment and furnishing inaccurate income details. The judgment emphasized the legal principles governing penalty imposition and the AO's discretion in initiating penalty proceedings during assessments.