1997 (11) TMI 126 - AT - Income Tax

Summary

Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income-tax Act.
2. Voluntary disclosure under section 273A of the Income-tax Act.
3. Reopening of assessment under section 147(a) of the Income-tax Act.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c):
The primary issue in this case revolves around the levy of penalty under section 271(1)(c) for concealment of income. The assessee initially filed returns showing lower income or losses for the assessment years 1979-80 and 1980-81. However, after a search conducted on 5-3-1985, the assessee made disclosures under section 273A, revealing substantial additional income. The Assessing Officer, upon reassessment, found significant discrepancies and levied penalties of Rs. 74,934 and Rs. 1,18,723 for the respective years. The CIT(Appeals) upheld the levy of penalty but excluded certain amounts from the penalty computation. The Tribunal emphasized that the original returns did not fully disclose the income, and subsequent disclosures and revised returns indicated concealment, justifying the penalty under section 271(1)(c).

2. Voluntary Disclosure under Section 273A:
The assessee argued that the disclosures made under section 273A within 15 days of the search should exempt them from penalties. The Tribunal noted that although the assessee made disclosures under section 273A, these were not complete as additional amounts were later revealed in revised returns. The Tribunal clarified that section 273A pertains to the waiver or reduction of penalties by the Commissioner and operates independently of section 271(1)(c), which deals with the concealment of income. The Tribunal concluded that the deeming provision in Explanation 2 of section 273A, which considers disclosures made within 15 days of seizure as voluntary and in good faith, applies only for the purposes of section 273A and not for determining concealment under section 271(1)(c).

3. Reopening of Assessment under Section 147(a):
The assessments for both years were reopened under section 147(a) with the approval of the CIT. The reassessment revealed substantial additional income not disclosed in the original returns. For the assessment year 1979-80, the reassessment determined a total income of Rs. 1,64,910, and for 1980-81, Rs. 2,55,680. The Tribunal found that the reopening of assessments was justified due to the significant discrepancies and concealed income discovered during the reassessment process.

Conclusion:
The Tribunal upheld the CIT(Appeals) decision to levy penalties under section 271(1)(c) for both assessment years, emphasizing that the original returns did not fully disclose the income, and subsequent disclosures indicated concealment. The Tribunal also highlighted that section 273A operates independently of section 271(1)(c) and does not exempt the assessee from penalties for concealment. The appeals by the assessee were dismissed, but the Tribunal noted that the assessee could seek a waiver or reduction of penalties under section 273A from the Commissioner.