1992 (5) TMI 60 - AT - Income Tax

Summary

Issues Involved:
1. Imposition of penalty under section 271(1)(c) of the Income Tax Act.
2. Validity of the revised return filed under the Amnesty Scheme.
3. Determination of concealment of income.
4. Application of Circular No. 451 dated 17-2-1986.
5. Consideration of judicial precedents.

Issue-wise Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c):
The assessee, a registered firm dealing in foodgrains, faced a penalty of Rs. 2,42,890 under section 271(1)(c) for concealment of income. The initial return filed declared an income of Rs. 27,710, but subsequent reassessment revealed an income of Rs. 4,09,370, leading to additions for suppressed sales and unexplained cash credits. The Assessing Officer (AO) and the CIT (Appeals) both upheld the penalty, citing the revised return under the Amnesty Scheme as evidence of concealment.

2. Validity of the Revised Return Filed under the Amnesty Scheme:
The assessee filed a revised return under the Amnesty Scheme after the reassessment, declaring the reassessed income and paying the due taxes. The AO and CIT (Appeals) argued that the revised return was not voluntary since it was filed after the concealment was detected. However, the Tribunal noted that the Amnesty Scheme allowed for revised returns even in cases of completed assessments, provided the appeal was withdrawn, which the assessee complied with.

3. Determination of Concealment of Income:
The AO and CIT (Appeals) based their conclusion of concealment on the revised return filed under the Amnesty Scheme. The Tribunal found no material evidence indicating that the additions (trading profits and cash credits) were indeed concealed income. The assessee provided affidavits and confirmations from creditors, which were not disproven by the Revenue. The Tribunal emphasized that mere additions in assessment do not automatically establish concealment.

4. Application of Circular No. 451 dated 17-2-1986:
The assessee relied on Circular No. 451, which clarified that immunity from penalty and prosecution applied if the revised return was filed before detection by the department. The Tribunal noted that the term "detection" implied actual discovery of concealment, not just a prima facie belief. Since the concealment was not conclusively established, the revised return under the Amnesty Scheme should not attract penalty.

5. Consideration of Judicial Precedents:
The Tribunal referenced several judicial decisions supporting the assessee's case. In Sir Shadilal Sugar & General Mills Ltd. v. CIT, the Supreme Court held that surrendering income to maintain good relations did not establish concealment. Similarly, in CIT v. Vinaychand Harilal, the Gujarat High Court ruled that admission of income did not equate to admission of concealment. The Tribunal applied these principles, concluding that the penalty was unjustified.

Conclusion:
The Tribunal found that the AO and CIT (Appeals) erred in imposing the penalty based solely on the revised return under the Amnesty Scheme without establishing actual concealment. The Tribunal quashed the penalty order, allowing the assessee's appeal.