1975 (8) TMI 58 - AT - Income Tax

Summary

Issues:
Penalty under section 271(1)(c) of the IT Act, 1961 imposed on two partners for not declaring share income from a firm in their assessment for the year 1968-69. The main issue is whether the omission to declare the income was deliberate concealment or a bona fide mistake.

Analysis:
The appeals were consolidated as common contentions were involved, and both parties agreed that the acts in each case were similar. The appeals challenged the penalty imposed on the partners for not declaring their share income from a firm in their assessment for the year 1968-69. The partners, Jitendra Kumar and Anil Kumar, did not show their share of income from the firm in their returns. The Income Tax Officer (ITO) held that the omission was deliberate and imposed penalties equal to the alleged concealed income.

The partners contended that the omission was a bona fide mistake due to the newly formed nature of the firm and the belief that the accounts would be closed after twelve months. They argued that their substantial income history made it unlikely they would deliberately conceal a small amount. The Departmental Representative supported the ITO's decision, emphasizing the failure to disclose partnership details in the return.

The Tribunal found that the omission was a bona fide mistake, considering the partners' substantial income history and the circumstances of the newly formed firm. Referring to legal precedent, the Tribunal held that penalty should not be imposed for a technical or venial breach or where the offender believed they were not liable to act as prescribed. Consequently, the penalties under section 271(1)(c) were deemed not leviable, and the appeals were allowed.

In conclusion, the Tribunal ruled in favor of the partners, determining that there was no deliberate concealment or furnishing of inaccurate particulars of income. The penalties were deleted based on the finding that the omission was a result of a bona fide mistake.