1994 (10) TMI 101 - AT - Income Tax

Assessed Income Assessing Officer Assessment Order Assessment Proceedings Inaccurate Particulars Income From Other Sources Penalty For Concealment Revised Return

Issues Involved:
1. Levy of penalty under section 271(1)(c) of the Income-tax Act.
2. Validity of the revised return filed by the assessee.
3. Assessing Officer's satisfaction and initiation of penalty proceedings.
4. Concealment of income and furnishing of inaccurate particulars.
5. Jurisdiction and procedural aspects of penalty imposition.

Detailed Analysis:

1. Levy of penalty under section 271(1)(c) of the Income-tax Act:
The appellant, a private limited company, appealed against the decision of the CIT (Appeals) XIV, New Delhi, regarding the imposition of a penalty of Rs. 9,77,100 under section 271(1)(c) of the Income-tax Act for the assessment year 1986-87. The penalty was related to the sum of Rs. 15,50,000 disclosed as income from other sources and Rs. 1,000 added by the Assessing Officer as income from undisclosed sources.

2. Validity of the revised return filed by the assessee:
The assessee filed its original return declaring an income of Rs. 15,700. Following a survey on 19-11-1987, a revised return was filed on 9-12-1987, declaring an income of Rs. 15,66,620, including Rs. 15,50,000 as income from other sources. The CIT (Appeals) held that the revised return, filed after the survey operations, could not be considered as a voluntary disclosure to rectify any omission or mistake in the original return.

3. Assessing Officer's satisfaction and initiation of penalty proceedings:
The Assessing Officer initiated penalty proceedings under sections 271(1)(a), 271(1)(c), and 273(1)(b) of the Act, issuing notices to the assessee. The assessee requested to keep the proceedings in abeyance until the decision on a petition filed under section 273A for waiver of penalty, which was not accepted. The penalty was imposed based on the revised return and the additional income disclosed.

4. Concealment of income and furnishing of inaccurate particulars:
The CIT (Appeals) confirmed the penalty, stating that the revised return was filed following the survey operations, which indicated concealment of income. The assessee argued that the revised return was filed voluntarily to buy peace and that there was no concealment. The assessee's counsel contended that the Assessing Officer did not record any satisfaction about the concealment of Rs. 15,50,000 in the assessment order, which only mentioned the concealment of Rs. 1,000.

5. Jurisdiction and procedural aspects of penalty imposition:
The assessee's counsel argued that the satisfaction of the Assessing Officer during the assessment proceedings is a prerequisite for imposing a penalty under section 271(1)(c), and such satisfaction was not visible in the assessment order. The Departmental Representative contended that the satisfaction could be inferred from the records and need not be explicitly mentioned in the assessment order. The Tribunal examined the relevant documents and evidence, including the assessment order, office notes, and entries in the order sheet.

Conclusion:
The Tribunal concluded that the Assessing Officer did not demonstrate satisfaction regarding the concealment of Rs. 15,50,000 during the assessment proceedings. The office note indicated that the revised return was filed before the start of assessment proceedings and before confronting the material found during the survey. The Tribunal held that the foundation for imposing the penalty under section 271(1)(c) was lacking and canceled the penalty imposed. The appeal of the assessee was allowed.

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