1977 (7) TMI 9 - HC - Income Tax

Summary

Issues:
Assessment of penalty under section 271(1)(c) of the Income-tax Act, 1961 based on alleged concealment or furnishing inaccurate particulars of income by the assessee.

Analysis:
The case involved an individual assessee who was a contractor by profession and had initially disclosed a profit of Rs. 20,000 from business in the return of income filed for the assessment year 1964-65. However, upon reassessment, it was found that the total receipt by the assessee was significantly higher than initially declared, leading to a higher business income of Rs. 46,881 being determined based on gross receipts. Subsequently, a penalty under section 271(1)(c) of the Income-tax Act was imposed on the assessee by the Income-tax Appellate Tribunal (ITAT) after the Income-tax Officer (ITO) initiated proceedings. The ITAT upheld the penalty imposed by the Income-tax Appellate Commissioner (IAC).

During the proceedings, the assessee's counsel had argued that there was a difference in the disclosure of net and gross receipts, suggesting that the initial return was based on net receipts of Rs. 1,60,520. However, upon closer examination, it was revealed that the assessee had not explicitly stated that the disclosed figure was net and not gross. The court noted that previous returns had consistently calculated profits based on gross receipts, and the lack of specificity in the disclosure of net receipts made the initial return misleading. Both the IAC and the ITAT had independently concluded that the assessee had concealed the particulars of his income, a finding that was deemed legally valid based on the available evidence.

In light of the above analysis, the High Court affirmed that the assessee had either concealed the particulars of his income or furnished inaccurate particulars, thereby justifying the imposition of the penalty under section 271(1)(c) of the Income-tax Act. The court held that the assessee's failure to specify that the disclosed amount was based on net receipts, coupled with the misleading nature of the disclosure in comparison to past practices, supported the conclusion of concealment or furnishing inaccurate particulars. The judgment upheld the penalty imposed on the assessee, with each party directed to bear their respective costs of the reference.