1982 (3) TMI 131 - AT - Income Tax

Summary

Issues:
1. Tribunal's cancellation of penalty for concealment of income and furnishing inaccurate particulars.
2. Acceptance of assessee's explanation in penalty proceedings under section 271(1)(c) of the IT Act.

Analysis:

Issue 1: Tribunal's cancellation of penalty for concealment of income and furnishing inaccurate particulars
The case involved an individual assessee with rental income and truck plying for the assessment year 1973-74. An addition of Rs. 25,000 was made due to cash introduced in the statement of affairs. The assessee explained the amount as related to intangible additions from previous years. The Tribunal noted that the assessee's voluntary disclosure of Rs. 25,000 was rejected due to failure to deposit the required tax within the statutory period. The assessing officer imposed a penalty of Rs. 25,000, which was upheld by the AAC. However, the Tribunal, after considering the evidence, canceled the penalty. The Tribunal found that the assessee's explanation, though not conclusive, was plausible. It noted the history of the assessee's declared and assessed income, indicating variations over the years. The Tribunal concluded that the penalty under section 271(1)(c) was not justified as the assessee's conduct did not amount to concealment of income or furnishing inaccurate particulars.

Issue 2: Acceptance of assessee's explanation in penalty proceedings under section 271(1)(c) of the IT Act
The Tribunal observed that the initiation of penalty proceedings was flawed as there was no satisfaction recorded by the assessing officer during the assessment proceedings. The Tribunal accepted the contention that the charge of concealing income particulars was not valid, especially since the addition was protective in nature. Regarding the explanation under section 271(1)(c) of the Act, the Tribunal found that the assessing officer did not require the assessee to discharge the onus of proof. The penalty was levied merely based on the addition accepted by the assessee. The Tribunal held that the explanations offered by the assessee in the penalty proceedings were sufficient to absolve the assessee from the ambit of the explanation under section 271(1)(c).

In conclusion, the Tribunal dismissed the Commissioner's request for reference of questions to the High Court, upholding its decision to cancel the penalty. The Tribunal based its decision on the factual findings and the lack of justification for the penalty under the provisions of the IT Act.