2009 (7) TMI 30 - HC - Income Tax

Initiation of Penalty Proceedings Section 271(1)(C) concealment of particulars - Contention that the penalty was liable to be set aside on account of CIT (A) describing the action of the assessee as showing inaccurate particulars, while the Assessing Officer described the same as concealing the particulars cannot be upheld. - The observations of the CIT (A) are also in the context of concealing and mere fact that mention of inaccurate particulars was also made, did not make any difference. Penalty is leviable Decision of supreme court in the matter of UOI Vs. Dharamendra Textile Processors 2008 -TMI - 31520 - SUPREME COURT followed.

Summary

Issues:
1. Valid initiation of penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961.
2. Justification of upholding the penalty based on concealment or inaccurate particulars of income.
3. Evaluation of the Tribunal's finding on the concealment of particulars of income.

Analysis:
1. The case involved an assessee deriving income from property, where the assessment for the relevant year was reopened under Section 147(a) of the Income Tax Act. Despite notice under Section 148, no revised return was filed by the assessee. The Assessing Officer discovered undisclosed income from capital gains due to the sale of property and initiated penalty proceedings, which were subsequently upheld by the CIT(A) and the Tribunal.

2. The contention raised by the assessee regarding the discrepancy between the grounds of penalty imposition by the Assessing Officer and the CIT(A) was dismissed by the Tribunal. The Tribunal found that the assessee willfully and deliberately concealed income by not disclosing capital gains in the original return and failing to file a revised return despite the notice under Section 148. The Tribunal emphasized the importance of disclosing all primary facts, as highlighted in relevant legal precedents.

3. The Tribunal, after considering the evidence and circumstances of the case, concluded that the assessee's actions did not reflect good faith and constituted a clear case of concealment of income particulars. The Tribunal also noted the assessee's criminal conviction related to income tax offenses, further supporting the decision to uphold the penalty. The Tribunal's decision was based on the absence of bona fides on the part of the assessee and the deliberate nature of the concealment.

4. The High Court, after hearing arguments from both parties and reviewing the record, upheld the Tribunal's decision. The High Court emphasized that the mere mention of inaccurate particulars by the CIT(A) did not alter the fact that the assessee had concealed income details. Referring to a recent Supreme Court judgment, the High Court reiterated that the parameters for determining criminal liability differed from those for civil penalties, and the Tribunal's findings were not deemed perverse in this case.

5. Ultimately, the High Court ruled against the assessee and in favor of the revenue, deciding that the initiation of penalty proceedings was valid and the penalty imposition was justified based on the concealment of income particulars. The reference was disposed of, affirming the decision of the Tribunal regarding the penalty upheld for the assessee's actions.