1986 (4) TMI 7 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Tribunal was justified in holding that the provisions of section 271(1)(c) were attracted and in applying the provisions of section 153(1)(b) of the Income-tax Act, 1961, thereby holding that the assessment was not time-barred.
2. Whether the Tribunal was justified in holding that the assessee had concealed the income relating to the sum of Rs. 1,14,092 and the provisions of section 271(1)(c) were clearly attracted.

Summary:

Issue 1: Application of Section 271(1)(c) and Section 153(1)(b)
The Tribunal held that the assessee filed a disclosure petition only after the concealment was discovered by the Department through a survey, and the assessee did not file revised returns declaring the correct income. The Tribunal concluded that the provisions of section 271(1)(c) were clearly attracted, and thus, the period for completing the assessment would be eight years under section 153(1)(b). However, the High Court found that the Tribunal's findings were contrary to the evidence on record. The High Court noted that the Income-tax Officer (ITO) did not initiate any proceeding within the normal period of limitation of four years and only initiated proceedings after the period had expired. The High Court held that the ITO could not extend the period of limitation under section 153(1)(b) without initiating proceedings within the normal period and without recording a finding of concealment supported by materials on record within that period. Therefore, the assessment was barred by limitation, and question No. 1 was answered in the negative and in favor of the assessee.

Issue 2: Concealment of Income
The High Court observed that the assessee had filed the return for the assessment year 1962-63 on July 30, 1962, and the survey report by the Inspector of Income-tax did not allege any concealment of income. The High Court also noted that the disclosure petition filed by the assessee on May 19, 1967, did not admit that the peak credit was the concealed income for the assessment year 1962-63. The Tribunal's findings that the disclosure petition was not filed voluntarily and that the assessee had concealed the income were not supported by the evidence on record. The High Court concluded that the Tribunal was not justified in holding that the assessee had concealed its income, and question No. 2 was answered in the negative and in favor of the assessee.