1979 (4) TMI 43 - AT - Income Tax

Summary

Issues:
- Imposition of penalties under section 271(1)(c) of the IT Act, 1961 on the assessee-firm for the assessment years 1970-71 and 1971-72.
- Appeal against the penalties imposed by the Income Tax Officer (ITO) and subsequent proceedings before the Appellate Assistant Commissioner (AAC).

Detailed Analysis:

1. Background and Assessment:
The assessee-firm, engaged in jute business, commission agency, and general merchant activities, had its original assessments completed by the ITO for the assessment years 1970-71 and 1971-72. Subsequently, a search conducted by the IT Department revealed incriminating evidence related to the business of Kanhaiyalal & Co., which led to re-assessment proceedings initiated by the ITO under section 148 of the Act.

2. Penalties Imposed:
The ITO imposed penalties of Rs. 15,000 for the assessment year 1970-71 and Rs. 20,000 for the assessment year 1971-72 on the grounds of concealment of income under section 271(1)(c) of the Act. The assessee-firm appealed against these penalties before the AAC.

3. Arguments Before the AAC:
The authorized representative for the assessee contended that since the income in question was disclosed in the revised returns filed in response to the notice under section 148, and full cooperation was extended to the Department, the penalties should be limited to the minimum amount of income sought to be concealed. The AAC agreed with this argument and restricted the penalties to 100% of the concealed incomes.

4. Appeal Before the Tribunal:
The assessee-firm appealed against the AAC's decision, arguing that the revised returns were filed at the instance of the ITO and there was no actual concealment of income. On the other hand, the Revenue contended that the revised returns were a result of incriminating evidence discovered by the Department, indicating deliberate concealment.

5. Tribunal's Decision:
After careful consideration of the facts and submissions, the Tribunal found that the assessee had indeed concealed income by not initially declaring the income from Kanhaiyalal & Co. in the original returns. The Tribunal noted that the revised returns were filed only after the Department uncovered evidence implicating the assessee. Therefore, the penalties imposed by the AAC were upheld, and the appeals by the assessee-firm were dismissed.

6. Conclusion:
The Tribunal concluded that the imposition of penalties for concealment of income was justified based on the circumstances, including the failure to disclose income initially, the subsequent filing of revised returns after the Department's discovery of incriminating evidence, and the lack of explanation for the discrepancies in income declarations. Consequently, the penalties imposed by the ITO and upheld by the AAC were deemed appropriate, leading to the dismissal of the appeals by the assessee-firm.