1981 (7) TMI 50 - HC - Income Tax

Summary

Issues:
Assessment of professional income, Penalty under section 271(1)(c) of the Income Tax Act, 1961, Concealment of income, Deliberate furnishing of inaccurate particulars of income.

Assessment of Professional Income:
The case involved the assessment of professional income for the assessment year 1959-60. The assessee initially filed multiple returns revising the income from profession, ultimately showing professional income of Rs. 80,575 from films. The Income Tax Officer (ITO) estimated the professional income at Rs. 3 lakhs, later reduced to Rs. 2 lakhs. The Appellate Assistant Commissioner (AAC) accepted the professional income at Rs. 95,500, determining the net professional income at Rs. 83,500 after deducting expenses. The Tribunal upheld the AAC's decision, allowing expenses of Rs. 15,000. The Tribunal also estimated the income from other sources at Rs. 46,000, differing from the AAC's estimate of Rs. 70,000.

Penalty under Section 271(1)(c):
The ITO initiated penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961, and imposed a penalty of Rs. 80,000 on the assessee. The Tribunal considered whether the assessee had concealed income by furnishing inaccurate particulars. The Tribunal, relying on the Supreme Court's decision in CIT v. Anwar Ali, held that there was no concealment regarding the professional income or the income from undisclosed sources. The Tribunal found that the amount assessed as income from undisclosed sources was not proved to be of revenue nature, leading to the cancellation of the penalty.

Concealment of Income and Deliberate Furnishing of Inaccurate Particulars:
The Tribunal analyzed the receipts and outgoings related to the income from undisclosed sources. It found discrepancies in the evidence presented by the department regarding certain receipts, loans, and expenditures. The Tribunal concluded that there was no evidence to establish that the disputed amount represented income of a revenue nature. Citing the Supreme Court's decision in Anwar Ali's case, the Tribunal emphasized that before imposing a penalty, the circumstances must reasonably point to the deliberate concealment of income or furnishing of inaccurate particulars. As the disputed amount was not proven to be revenue income, the Tribunal held that the penalty provisions were not applicable.

In conclusion, the High Court agreed with the Tribunal's findings, emphasizing that the disputed amount assessed as income from undisclosed sources was not proved to be of revenue nature, justifying the cancellation of the penalty. The judgment upheld the Tribunal's decision, answering both questions in favor of the assessee and against the revenue department.