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1994 (5) TMI 39 - AT - Income TaxAdditions To Income, Advance Tax, Assessing Officer, Assessment Year, Bank Deposits, Late Filing, Penalty For Concealment, Reasonable Cause, Revised Return, Right To Appeal, Undisclosed Income, Waiver Of Penalty
Issues Involved:
1. Quantum appeal relating to the assessment order under section 143(3). 2. Addition of Rs. 50,000 as unexplained deposits. 3. Interest charged under sections 139 and 217. 4. Penalties under sections 271(1)(a), 271(1)(c), and 273(1)(b). Detailed Analysis: 1. Quantum Appeal Relating to the Assessment Order Under Section 143(3): The appeals pertain to the assessment year 1988-89. A search operation under section 132 was conducted on 3rd July 1987, where diamonds worth Rs. 5,06,712 and savings bank pay-in-slips aggregating to Rs. 1,01,100 were seized from the appellant. The appellant initially offered the value of diamonds and bank deposits as income during the search but did not include them in the original return filed on 17-10-1989. A revised return was filed on 27-9-1990, including the diamonds' value but not the bank deposits. 2. Addition of Rs. 50,000 as Unexplained Deposits: The Assessing Officer (A.O.) observed that the appellant did not produce evidence for two deposits of Rs. 30,000 and Rs. 20,000 made in April 1987. The appellant admitted these amounts as income during the search under section 132(4). The A.O. added Rs. 50,000 to the income, considering the deposits unexplained and initiated penalty proceedings under sections 271(1)(a), 271(1)(c), and 273(1)(b). The appellant argued before the Commissioner of Income Tax (Appeals) [CIT(A)] that the deposits were from withdrawals made in November 1986. However, the CIT(A) upheld the addition, relying on the appellant's statement during the search. The Tribunal confirmed this addition, noting the appellant's shifting explanations and failure to provide consistent evidence. 3. Interest Charged Under Sections 139 and 217: No arguments were presented by the appellant's counsel regarding the interest charged under sections 139 and 217. The CIT(A) confirmed the levy of such interest, and the Tribunal found no justification to interfere with this finding. 4. Penalties Under Sections 271(1)(a), 271(1)(c), and 273(1)(b): Penalty under Section 271(1)(c): The A.O. levied penalties for concealment of income and furnishing inaccurate particulars. The appellant argued for immunity under Explanation 5 to section 271(1)(c), claiming the diamonds belonged to another individual and that he surrendered the income during the search due to coercion. The Tribunal analyzed the conditions for immunity under Explanation 5, focusing on whether the appellant specified the manner in which the income was derived and paid the tax. The Tribunal found that the appellant fulfilled the conditions for immunity regarding the diamonds' value but not for the unexplained bank deposits. The penalty for the diamonds was canceled, but the penalty for the Rs. 50,000 addition was upheld, with the A.O. directed to levy the minimum penalty. Penalty under Section 271(1)(a): The appellant failed to file the return on time, citing lack of funds. The Tribunal found no reasonable cause for the delay, and the penalty under section 271(1)(a) was upheld. Penalty under Section 273(1)(b): The A.O. levied a penalty for failing to furnish a statement of advance tax. The Tribunal noted that the appellant did not include the value of diamonds in the advance tax estimate, despite admitting it as income during the search. The Tribunal directed the A.O. to levy the minimum penalty at the rate of 10%. Conclusion: - The addition of Rs. 50,000 as unexplained deposits was confirmed. - The interest charged under sections 139 and 217 was upheld. - The penalty under section 271(1)(c) was partially canceled for the diamonds' value but upheld for the bank deposits. - The penalty under section 271(1)(a) was upheld. - The penalty under section 273(1)(b) was reduced to the minimum rate of 10%. Result: - ITA Nos. 5402 & 1027 were dismissed. - ITA Nos. 1038 & 1039 were partly allowed.
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