1988 (3) TMI 52 - HC - Income Tax

Summary

Issues Involved:
1. Rejection of the assessee's contention regarding voluntary disclosure of profit.
2. Evidence supporting the finding of concealed profit.
3. Justification of penalty under section 271(1)(c) of the Income-tax Act.
4. Justification of the quantum of penalty imposed.

Issue-wise Detailed Analysis:

1. Rejection of the Assessee's Contention Regarding Voluntary Disclosure of Profit:
The Tribunal rejected the assessee's contention that it had disclosed a profit of Rs. 3 lakhs voluntarily in the first revised return without any inquiry by the Income-tax Officer and without contrary evidence from the Department. The assessee claimed to have sold an import licence valued at Rs. 12,708 for Rs. 3 lakhs, but this was found to be false. The Tribunal determined that the revised return was filed only after inquiries by the Customs Department and the CBI, and not voluntarily or bona fide.

2. Evidence Supporting the Finding of Concealed Profit:
The Tribunal found substantial evidence indicating that the assessee had concealed a profit of Rs. 5,28,547. The investigation revealed that the assessee had altered the values of import licences and had imported and sold yarn, contrary to its claim of selling the licences. Statements from various parties, including customs officials and involved individuals, supported the finding that the assessee had imported yarn and sold it, earning a profit of Rs. 5,28,547, which was not disclosed in the original return.

3. Justification of Penalty Under Section 271(1)(c) of the Income-tax Act:
The Tribunal justified the imposition of penalty under section 271(1)(c) of the Act, which pertains to concealing income or furnishing inaccurate particulars. The Tribunal held that the assessee's failure to return the correct income arose from gross or willful neglect. The revised return filed by the assessee was not considered bona fide, as it was prompted by external inquiries and did not disclose the true income. The Tribunal found that the assessee had concealed income and furnished inaccurate particulars, justifying the penalty under the substantive provisions of section 271(1)(c) and its Explanation.

4. Justification of the Quantum of Penalty Imposed:
The Tribunal imposed a penalty of Rs. 7,92,820, which is 150% of the concealed income of Rs. 5,28,547. The Tribunal found this penalty reasonable and justified, considering the facts and circumstances of the case. The Tribunal noted that even the maximum penalty prescribed under law would have been justified. The Tribunal's decision to impose a penalty at 150% of the concealed income was upheld as fully justified.

In conclusion, the Tribunal answered all the questions referred to it in the affirmative and against the assessee, affirming the imposition and quantum of the penalty. The reference was answered accordingly with no order as to costs.