1984 (2) TMI 109 - AT - Income Tax

Advance Tax, Assessment Year, Bona Fide, Levy Of Penalty, Penalty For Concealment, Penalty Proceedings, Revised Return

Summary

Issues Involved:
1. Penalty under section 271(1)(c) of the Income-tax Act, 1961 for concealment of income.
2. Penalty under section 273(c) of the Income-tax Act, 1961 for failure to furnish an estimate of advance tax.

Issue-wise Detailed Analysis:

1. Penalty under section 271(1)(c) of the Income-tax Act, 1961 for concealment of income:

The assessee, a registered firm engaged in the cloth business, filed an original return showing an income of Rs. 66,787 for the assessment year 1978-79. Following a search on the business premises on 25-10-1978, a revised return was filed on 28-9-1979, showing an income of Rs. 2,18,810, which included an extra income of Rs. 1,52,027.82 surrendered under the head 'Income from other sources'. This revised return was filed due to the seizure of a diary noting sales of Rs. 1,52,027.82. The assessment was completed on a total income of Rs. 2,59,315, later reduced to Rs. 2,19,350 by the Tribunal in appeal. The Income Tax Officer (ITO) initiated penalty proceedings under section 271(1)(c) and levied a penalty of Rs. 1,04,000, concluding that the assessee had concealed income or filed inaccurate particulars in the original return.

The assessee appealed, arguing that the revised return was filed in good faith to purchase peace and due to an inability to produce documentary evidence. The Commissioner (Appeals) upheld the penalty, citing amended provisions of section 271(1)(c). The Tribunal examined the facts and circumstances, noting that the revised return and the accompanying letter dated 28-9-1979, which stated the surrender was to purchase peace, did not constitute a bona fide disclosure. The Tribunal found that the assessee's explanation was not bona fide and that the revised return was filed under duress following the search and seizure. The Tribunal concluded that the penalty was rightly imposed and sustained, as the facts demonstrated deliberate concealment of income.

2. Penalty under section 273(c) of the Income-tax Act, 1961 for failure to furnish an estimate of advance tax:

A notice under section 210 was served on the assessee demanding Rs. 5,373 as advance tax. Based on the assessment, the advance tax payable was determined to be Rs. 55,472. Since the payable amount exceeded the demanded amount by more than 33 1/3%, the assessee was required to furnish an estimate of current income and pay the advance tax under section 212(3A). The assessee failed to do so, leading to penalty proceedings under section 273(c). The ITO imposed a penalty of Rs. 2,795, noting that the search and seizure had revealed documents indicating higher income, which the assessee should have been aware of.

The Commissioner (Appeals) confirmed the penalty, and the Tribunal, considering the appeal, found that the penalty under section 273(c) was consequential to the penalty under section 271(1)(c). Given the Tribunal's finding that the penalty under section 271(1)(c) was justified, it upheld the penalty under section 273(c) as well, concluding that the assessee failed to furnish an estimate of advance tax without reasonable cause.

Conclusion:
The Tribunal dismissed both appeals, confirming the penalties under sections 271(1)(c) and 273(c) of the Income-tax Act, 1961, for concealment of income and failure to furnish an estimate of advance tax, respectively. The penalties were deemed justified based on the facts and circumstances of the case, demonstrating deliberate concealment and lack of bona fide explanation by the assessee.