2001 (2) TMI 260 - AT - Income Tax

Summary

Issues Involved:
The appeal concerns the cancellation of a penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961 for concealment of income, following the filing of a revised return by the assessee after discrepancies were pointed out during scrutiny.

Details of the Judgment:

Issue 1: Imposition of Penalty under Section 271(1)(c)
The AO imposed a penalty of Rs. 43,489 on the assessee for concealment of income based on discrepancies found in the books of account after impounding them. The AO contended that the revised return filed by the assessee, showing a significant increase in income, was an attempt to conceal the actual income. The AO highlighted that the original and revised returns did not match, indicating a conscious attempt to hide income. The AO justified the penalty by stating that the true income had escaped assessment, leading to the penalty under section 271(1)(c).

Issue 2: Appeal and Arguments
In the appeal, the assessee argued that no penalty should be levied as the revised return rectified the discrepancies voluntarily, and the income was assessed based on the revised return. The assessee contended that the revised return was filed before the completion of the assessment, showing cooperation with the tax authorities. Citing previous court decisions, the assessee claimed that penalty cannot be imposed if a revised return is filed before assessment, even after receiving notice from the tax department.

Issue 3: CIT(A) Decision and Ruling
The CIT(A) ruled in favor of the assessee, stating that no penalty was justified under section 271(1)(c). The CIT(A) emphasized that the assessee rectified the discrepancies by filing a revised return and cooperated in the assessment process. Referring to a Delhi High Court decision, the CIT(A) highlighted that the conduct of the assessee post-filing of the return is crucial in determining penalty imposition. The CIT(A) upheld that the penalty was not warranted in this case.

Issue 4: Tribunal Decision and Conclusion
The Tribunal upheld the CIT(A)'s decision, noting that the Department accepted the revised return, and no additions were made to the disclosed income. Referring to a previous case where penalty was deleted under similar circumstances, the Tribunal dismissed the Revenue's appeal. The Tribunal emphasized the provision allowing revision of returns until assessment completion and confirmed that no penalty should be imposed in this scenario.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision that no penalty under section 271(1)(c) should be imposed on the assessee for concealing income through a revised return filed voluntarily.