1987 (9) TMI 29 - HC - Income Tax

Summary

Issues Involved:
1. Whether the revised return filed by the assessee was voluntary or induced by the Income-tax Officer.
2. Whether the penalty u/s 271(1)(c) of the Income-tax Act, 1961, was justified.
3. Whether the Tribunal correctly interpreted the covering letter dated September 28, 1979, filed along with the revised return.
4. Whether the Tribunal correctly applied the Explanation to section 271(1)(c) of the Act.
5. Whether there was a divergence of judicial opinion relevant to the case.

Summary:

1. Voluntariness of the Revised Return:
The assessee filed a revised return showing an extra income of Rs. 1,52,027.82 after a search conducted on October 25, 1978, revealed unaccounted sales. The Income-tax Officer initiated penalty proceedings u/s 271(1)(c) and held that the revised return was not filed due to bona fide inadvertence or omission but was forced by the search and seizure operations. The Tribunal confirmed this finding, stating that the revised return was not voluntary but a result of detection by the Income-tax Officer.

2. Justification of Penalty u/s 271(1)(c):
The Income-tax Officer levied a penalty of Rs. 1,04,000, which was upheld by the Commissioner of Income-tax (Appeals) and the Tribunal. The Tribunal held that the explanation offered by the assessee was not bona fide and that the original return was not revised due to bona fide inadvertence or omission. The Tribunal concluded that the amount of Rs. 1,52,027 added to the total income represented concealed income, thus justifying the penalty.

3. Interpretation of the Covering Letter:
The Tribunal examined the covering letter dated September 28, 1979, and found that the surrender of the extra income was not induced by the Income-tax Officer but was an admission made by the assessee in its own favor. The Tribunal disbelieved the assessee's claim that the revised return was filed to purchase peace and close litigation, stating that the surrender was not voluntary.

4. Application of Explanation to Section 271(1)(c):
The Tribunal applied clause (B) of Explanation 1 to section 271(1)(c), which states that if a person offers an explanation that is not bona fide, the amount added to the total income shall be deemed to represent concealed income. The Tribunal found that the explanation offered by the assessee was not bona fide and that material facts were deliberately not disclosed in the original return, thus confirming the penalty.

5. Divergence of Judicial Opinion:
The assessee cited cases like CIT v. Mansa Ram and Sons, Addl. CIT v. Kishan Singh Chand, and Addl. CIT v. Radhey Shyam to argue a divergence of judicial opinion. However, the court found these cases distinguishable as they involved different assessment years and circumstances. The court held that there was no conflict between these decisions and the present case, as the Tribunal's findings were based on the specific facts and the applicable Explanation to section 271(1)(c).

Conclusion:
The court concluded that no question of law arose out of the Tribunal's order and that the Tribunal was justified in rejecting the reference application of the assessee. The application was rejected with costs assessed at Rs. 125.