2002 (10) TMI 221 - AT - Income Tax

Summary

Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income Tax Act.
2. Concealment of income and furnishing inaccurate particulars of income.
3. Validity of the revised return and its implications.
4. Relevance and binding nature of statements made by third parties.
5. Procedural correctness in the initiation and imposition of penalty.

Issue-Wise Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c) of the Income Tax Act:
The core issue revolves around the imposition of a penalty amounting to Rs. 1,09,733 under section 271(1)(c) for the assessment year 1992-93. The penalty was levied due to the assessee's failure to disclose additional income in the original return, which was later included in a revised return filed on 15-8-1993.

2. Concealment of Income and Furnishing Inaccurate Particulars of Income:
The original return filed on 22-10-1992 showed an income of Rs. 50,220, omitting the additional income of Rs. 2,04,259 discovered during a survey conducted on 22-12-1991. The discrepancy in stock was not explained satisfactorily by the assessee, who later claimed that part of the stock belonged to other entities. The assessee's failure to reconcile the stock during the survey and assessment proceedings, coupled with the filing of a revised return, was considered as concealment of income and furnishing inaccurate particulars.

3. Validity of the Revised Return and Its Implications:
The revised return included the additional income of Rs. 2,04,259, which was initially omitted. The assessee argued that the revised return was filed voluntarily and the omission was due to incorrect advice. However, the authorities concluded that the revised return was not voluntary but a result of the detection of concealment by the department. The CIT(A) and the Tribunal upheld that the revised return did not absolve the assessee of the concealment charge.

4. Relevance and Binding Nature of Statements Made by Third Parties:
The assessee contended that the statement made by Shri Vinodbhai M. Patel during the survey was not binding as he had no authority to represent the assessee. However, the authorities noted that the assessee acted upon this statement by paying advance tax based on the disclosed income, thereby accepting its relevance. The Tribunal also observed that the assessee's later attempts to discredit the statement were unsubstantiated.

5. Procedural Correctness in the Initiation and Imposition of Penalty:
The assessee argued that the penalty initiation was flawed as the Assessing Officer was not clear whether the penalty was for concealment of income or furnishing inaccurate particulars. The Tribunal, however, found that both charges could coexist and that the penalty was rightly imposed for both concealment and furnishing inaccurate particulars. The Tribunal referred to various judicial precedents to support that the expressions "concealed the particulars of income" and "furnished inaccurate particulars of such income" can be used in disjunctive terms and do not exclude each other.

Conclusion:
The Tribunal upheld the levy of penalty under section 271(1)(c), concluding that the assessee had concealed income and furnished inaccurate particulars in the original return. The revised return, filed after detection, was not considered voluntary. The statement made by Shri Vinodbhai M. Patel was deemed relevant and binding, as the assessee acted upon it by paying advance tax. The procedural challenge raised by the assessee was dismissed, and the imposition of penalty was found to be procedurally correct and substantiated by the facts and circumstances of the case. The appeal of the assessee was dismissed.