2007 (2) TMI 166 - HC - Income Tax

Bogus claim for depreciation - Appellate Tribunal is right in law in holding that the filing of the revised return before issue of notice under Section 148 of the Act, cannot be treated as a voluntary act, that the appellant is guilty of concealing income and is liable for penalty under Section 271(1)(c) of the Act Order of tribunal is within law so penalty is justified - no questions of law appeal dismissed

Summary

Issues:
1. Appeal regarding penalty under Section 271(1)(c) of the Income Tax Act for the assessment year 1995-96.
2. Validity of filing a revised return after the Department established the bogus nature of the transaction.

Analysis:

Issue 1:
The appeal revolves around the penalty levied under Section 271(1)(c) of the Income Tax Act for the assessment year 1995-96. The primary questions of law raised were whether the Appellate Tribunal was correct in confirming the penalty and whether the filing of the revised return before the notice under Section 148 of the Act could be considered a voluntary act. The case involved a complex scenario where the assessee initially claimed 100% depreciation, but subsequent investigations revealed a fraudulent lease transaction aimed at facilitating finance. The Revenue concluded that the transaction was false, and the assessee was aware of its nature, leading to penalty proceedings under Section 271(1)(c) for concealment of income and furnishing inaccurate particulars.

Issue 2:
The second issue pertains to the validity of filing a revised return after the Department uncovered the bogus nature of the transaction. The Assessing Authority, Commissioner (Appeals), and the Tribunal all found that the assessee was aware of the fraudulent transaction and had full knowledge of its falsity. Despite the assessee's claim of acting in good faith and voluntarily withdrawing the depreciation claim upon learning about the fraud, the authorities maintained that the revised return was a result of the Revenue's investigation. The Tribunal specifically highlighted that the assessee's conduct demonstrated awareness of the non-existence of assets and a deliberate attempt to claim unmerited deductions. Consequently, the Tribunal upheld the penalty under Section 271(1)(c) based on the Supreme Court's precedent and rejected the appeal challenging the penalty.

In conclusion, the High Court dismissed the appeal under Section 260A of the Income Tax Act, emphasizing that the Tribunal's factual findings were conclusive and did not raise any legal questions. The Court upheld the penalty, noting that the revised return was a consequence of the information possessed by the Revenue, affirming the assessee's guilt of concealment of income by furnishing inaccurate particulars.