1981 (1) TMI 103 - AT - Income Tax

Issues Involved:
1. Levy of penalty under Section 271(1)(c) for concealment of income.
2. Validity and quantum of penalties imposed for the assessment years 1966-67 to 1970-71.
3. Consideration of evidence related to the disclosure of share income from firms.
4. Assessment of interest income from various sources and its impact on penalties.

Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c) for Concealment of Income:
The core issue revolves around the imposition of penalties under Section 271(1)(c) for concealment of income. The Income Tax Officer (ITO) initiated proceedings under Section 147(a) and issued notices under Section 148 to reopen the assessments for the years 1966-67 to 1970-71. The penalties were imposed on the grounds that the assessee had concealed particulars of income while filing the original returns. The assessee contended that the disclosure petition was voluntary and should not attract penalties. However, the Tribunal, guided by the decision of the Allahabad High Court in Banaras Chemical Factory vs. CIT, held that the assessee is liable for penalties as the concealment is with reference to the original returns.

2. Validity and Quantum of Penalties Imposed:
The ITO initially levied penalties for the five assessment years, which were subsequently reduced by the Assistant Appellate Commissioner (AAC). The Revenue appealed against the reduction, while the assessee appealed against the penalties retained. The Tribunal upheld the penalties but adjusted the quantum based on the law applicable at the time of filing the returns, referencing the Supreme Court decision in Brijmohan vs. CIT. For the assessment years 1966-67 and 1967-68, penalties should be calculated based on the tax sought to be avoided, while for the years 1968-69 onwards, penalties should be equivalent to the amount of concealment.

3. Consideration of Evidence Related to the Disclosure of Share Income from Firms:
A significant point of contention was the share income from M/s. Suresh Chandra Vinod Kumar and M/s. G.N. Seth & Bros for the assessment year 1968-69. The assessee claimed to have informed the ITO about the share income via a letter dated 2nd June 1969, which was not found in the ITO's records. The Tribunal, after examining the receipt and the office copy of the letter, accepted the assessee's claim and concluded that there was no concealment of income in this regard. Consequently, no penalty was imposed for the share income from these firms.

4. Assessment of Interest Income from Various Sources:
The Tribunal examined the interest income from M/s. Beni Pd. Sidh Gopal & Co. II Account, CTD Bank Account, and debentures. For the assessment year 1966-67, the interest income from M/s. Beni Pd. Sidh Gopal & Co. II Account was not disclosed in the original return nor in the disclosure petition, leading to a penalty for concealment. Similarly, the interest from the CTD Bank Account and debentures, though petty amounts, were not disclosed in the original returns, justifying the imposition of penalties.

Conclusion:
The Tribunal's decision resulted in the following outcomes for the assessment years:

- 1966-67 and 1967-68: Penalties were reduced and the ITO was directed to recompute minimum penalties based on the tax sought to be avoided.
- 1968-69, 1969-70, and 1970-71: Penalties were upheld to the extent of Rs. 22,193, Rs. 1,932, and Rs. 1,862 respectively.
- Share Income from Firms: No penalties were imposed for the share income from M/s. Suresh Chandra Vinod Kumar and M/s. G.N. Seth & Bros for the assessment year 1968-69 due to the assessee's bona fide disclosure.
- Interest Income: Penalties were confirmed for the non-disclosure of interest income from M/s. Beni Pd. Sidh Gopal & Co. II Account, CTD Bank Account, and debentures.

The appeals of the assessee and the Revenue were treated as allowed in part for the assessment years 1966-67 to 1969-70, while the appeal of the Revenue for the assessment year 1970-71 was allowed and that of the assessee was dismissed.

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