2007 (8) TMI 278 - HC - Income Tax

Return was filed by the assessee without including therein cash compensatory support (CCS) since revised return was filed voluntarily including CCS, penalty is not imposable on ground of concealment of income revenue s appeal has no merit and is accordingly dismissed

Summary

Issues:
Penalty under section 271(1)(c) for non-inclusion of cash compensatory support (CCS) in the original return.

Analysis:
The judgment involves the issue of penalty imposition under section 271(1)(c) for the non-inclusion of cash compensatory support (CCS) in the original return. The assessee initially filed a return without including the CCS based on a decision of a Special Bench of the Income-tax Appellate Tribunal. However, a subsequent amendment made the cash assistance taxable, prompting the assessee to voluntarily file a revised return including the CCS amount. The Assessing Officer imposed a penalty of Rs. 37,89,350 for concealment due to the non-inclusion of CCS in the original return.

The appellate authority set aside the penalty, considering the voluntary filing of the revised return and the plausible cause for non-inclusion, i.e., reliance on the Special Bench decision. The Tribunal upheld the appellate authority's decision, leading to the Revenue challenging the order through an appeal under section 260A of the Income-tax Act. The questions of law raised by the Revenue included the justification of upholding the cancellation of penalty, the timing of the revised return filing in relation to the notice issued under section 142(1), and the consideration of a specific Supreme Court decision.

In its judgment, the High Court dismissed the appeal, stating that based on the facts presented, the appeal lacked merit. The court did not find the grounds raised by the Revenue to be legally justified, ultimately upholding the decision of the Tribunal regarding the cancellation of the penalty. The court's analysis focused on the voluntary nature of the revised return filing, the circumstances surrounding the initial non-inclusion of CCS, and the legal implications of the relevant decisions and amendments in determining the penalty under section 271(1)(c).