1978 (7) TMI 131 - AT - Income Tax

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act based on concealment of income in the original return filed by the assessee before 1st April, 1976.

Detailed Analysis:

1. The judgment by the Appellate Tribunal ITAT CUTTACK involved the appeal by the Department and the Cross-Objection by the assessee regarding the levy of penalty under section 271(1)(c) of the Income Tax Act, which was the common issue in this case.

2. The original assessment was completed before 31st March, 1975, but the Income Tax Officer (ITO) later discovered that the assessee had not disclosed one of the sources of income in the original return. Subsequently, the assessment was reopened, and penalty proceedings under section 271(1)(c) were initiated by the ITO.

3. The assessee contended that there was no concealment on their part, as they had informed their Income Tax Lawyer about all sources of income. However, the ITO imposed a penalty equal to the concealed income found during reassessment.

4. The Appellate Authority Commissioner (AAC) considered the submissions and held that the penalty should be computed based on the tax sought to be evaded, as per the amended law effective from 7th April, 1976. The AAC maintained a penalty of Rs. 3,000 in this case.

5. The Department appealed the AAC's decision, arguing that the amended law should not apply as the default occurred before 1st April, 1976. The assessee, through Cross-Objection, supported the AAC's decision, citing relevant court judgments.

6. The Tribunal concurred with the AAC's decision, stating that the penalty should be imposed based on the law in force at the time the ITO decided to levy the penalty. The Tribunal upheld the penalty and the quantum determined by the AAC.

7. The Tribunal rejected the assessee's claim that the penalty was mechanically imposed, noting that the ITO had considered the explanation provided by the assessee. The Tribunal found the penalty justified based on the circumstances of the case.

8. Ultimately, the Tribunal dismissed both the Departmental appeal and the assessee's cross-objection, affirming the penalty imposed by the ITO and maintained by the AAC.

This judgment highlights the application of penalty provisions under the Income Tax Act in cases of concealment of income, emphasizing the importance of compliance with the law in force at the time of assessment and penalty imposition.