2016 (9) TMI 332 - HC - Income Tax

Penalty u/s 271(1)(c) - Held that - The assessee did not disclose the details of the creditors nor their list but merely claimed them in the return. Upon the assessment being picked up in scrutiny for further enquiry, the assessee came out with the details and surrendered the income for taxation. In the circumstances, we are of the opinion that there is no infirmity with the order of the ITAT. The question of law is answered against the assessee/appellant and in favour of the revenue.

Summary

Issues:
Correctness of penalty imposed upon the assessee for non-disclosure of particulars and surrendering income during assessment proceedings.

Analysis:
The case involved a penalty of ?1,41,290 imposed upon the assessee for non-disclosure of particulars regarding sundry creditors in the return filed for AY 1993-94. The Assessing Officer (AO) initiated scrutiny proceedings upon noting discrepancies in the balance sheet. The assessee failed to provide confirmations for most creditors, and investigations revealed that many creditors did not operate from the addresses provided. The AO disbelieved the assessee's contentions and imposed the penalty. The Commissioner of Income Tax (Appeals) accepted the assessee's appeal, citing non-wilful omission. However, the Income Tax Appellate Tribunal (ITAT) overturned this decision.

The counsel for the assessee argued that the non-disclosure was inadvertent and due to the nature of the trade. The counsel relied on the Supreme Court's judgment in Mak Data Pvt. Ltd. v. CIT and contended that the surrender of income was not voluntary. The High Court noted the Supreme Court's stance on voluntary surrender and the obligation of the assessee to declare true income. The High Court opined that the ITAT's decision was not a significant error of law. The assessee failed to disclose creditor details initially but provided them during scrutiny and surrendered the income for taxation.

Ultimately, the High Court upheld the ITAT's decision, ruling against the assessee and in favor of the revenue. The court found no fault with the ITAT's order, concluding that the penalty was justified given the circumstances. The appeal was dismissed accordingly.