1981 (11) TMI 35 - HC - Income Tax

Summary

Issues Involved:
1. Cancellation of penalty imposed under section 271(1)(c) of the Income-tax Act, 1961.
2. Applicability of section 28(1)(c) of the Indian Income-tax Act, 1922, versus section 271(1)(c) of the Income-tax Act, 1961.
3. Burden of proof of concealment on the Department.
4. Finding of intentional concealment or deliberate furnishing of inaccurate particulars by the assessee.

Issue-Wise Detailed Analysis:

1. Cancellation of Penalty Imposed Under Section 271(1)(c):
The Tribunal had canceled the penalty of Rs. 13,781 imposed under section 271(1)(c) for the assessment year 1961-62. The High Court upheld this decision, noting that the Tribunal found no deliberate concealment of income in the revised return filed by the assessee. The Tribunal's decision was based on the fact that the revised return was accepted by the ITO without any significant objections, which indicated no concealment in the reassessment proceedings.

2. Applicability of Section 28(1)(c) of the Indian Income-tax Act, 1922, Versus Section 271(1)(c) of the Income-tax Act, 1961:
The Tribunal held that the law regarding penalty as it stood at the time of the original return governs the penalty proceedings. Since the 1961 Act came into force on April 1, 1962, the Tribunal applied section 28(1)(c) of the 1922 Act. The High Court confirmed this, emphasizing that the penalty provisions applicable are those in force at the time the wrongful act was committed. The Tribunal found that the non-disclosure of certain income items in the original return did not amount to intentional concealment under the 1922 Act.

3. Burden of Proof of Concealment on the Department:
The Tribunal had cast the burden of proof of concealment on the Department, which the High Court upheld. The Tribunal noted that the Department had not provided sufficient evidence to prove that the assessee had intentionally concealed income or deliberately furnished inaccurate particulars. The High Court reiterated the principle that penalty for concealment can only be imposed if there is conscious and deliberate concealment by the assessee.

4. Finding of Intentional Concealment or Deliberate Furnishing of Inaccurate Particulars:
The Tribunal found that the assessee did not intentionally conceal income or deliberately furnish inaccurate particulars. The High Court agreed with this finding, noting that the Tribunal had considered the facts and circumstances, including the absence of proper books of account and the voluntary filing of a revised return by the assessee. The Tribunal's conclusion that there was no deliberate concealment was supported by the evidence, and the High Court found no reason to overturn this finding.

Conclusion:
The High Court answered all the questions in favor of the assessee and against the Department. The court confirmed that the penalty provisions applicable are those that were in force at the time the wrongful act was committed, and the Department failed to prove intentional concealment by the assessee. Therefore, the cancellation of the penalty by the Tribunal was upheld.