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Issues involved: Reference against cancellation of penalty u/s 271(1)(c) of IT Act for asst. yr. 1990-91.
Summary: 1. The Tribunal cancelled the penalty levied on the assessee under s. 271(1)(c) of the IT Act for the assessment year 1990-91. The respondent, an advocate and power of attorney holder, failed to establish that the seized cash belonged to another person, leading to penalty proceedings for concealment of income initiated by the Assessing Officer (AO). The AO limited the penalty to the minimum amount despite the concealment being evident. The Tribunal's decision was based on the assumption that the assessee returned the income and paid tax before the due date for filing the return. 2. The High Court heard arguments from both parties' senior counsels. The Revenue's counsel highlighted the incorrect assumption by the Tribunal regarding the due date for filing the return. The assessee had ample time to declare the income and pay tax after the search. The High Court noted that the assessee could have avoided penalty by disclosing the income during the search and paying tax accordingly. The court also emphasized that the decisions cited by the assessee's counsel were not directly applicable to the case at hand, as they did not address the scope of Expln. 5 to s. 271(1)(c) of the Act. 3. Expln. 5 to s. 271(1)(c) of the Act deals with penalties arising from search operations. It presumes concealment of income if the assessee fails to disclose income and offer payment during the search. In this case, the assessee not only failed to disclose the income during the search but also provided an unproven explanation regarding ownership. The High Court concluded that concealment was established beyond doubt u/s Expln. 5, making the assessee liable for penalty. The court upheld the minimum penalty imposed by the AO and ruled in favor of the Revenue, reversing the Tribunal's decision.
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