1982 (1) TMI 93 - AT - Income Tax

Summary

Issues:
1. Penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for concealment.
2. Penalty imposed under section 273(c) for failure to file revised estimate under section 212(3A).

Detailed Analysis:

Issue 1: Penalty under section 271(1)(c) for concealment
The case involved an appeal against the penalty imposed for concealment under section 271(1)(c) of the Income-tax Act, 1961. The assessee, Shri Devender Singh, had filed a revised return for the assessment year 1976-77, declaring certain unexplained investments in household furniture. The Income Tax Officer (ITO) initiated penalty proceedings, leading to a penalty of Rs. 5,000 for concealment. The Appellate Authority Commissioner (AAC) upheld the penalty, prompting the appeal before the ITAT. The assessee contended that the revised return was based on changed circumstances arising after the original filing, following a survey by the Income-tax Department. The assessee argued that the furniture's inclusion was a settlement to avoid further investigation, not constituting income for the relevant year. The assessee relied on legal precedents to support the argument that no penalty should be imposed. The ITAT analyzed the facts, emphasizing that the investment was not proven to be the assessee's, and the source and date of investment were not investigated. Citing legal precedents, the ITAT concluded that no penalty for concealment could be levied due to lack of evidence of fraud or wilful neglect.

Issue 2: Penalty under section 273(c) for failure to file revised estimate
In a separate penalty proceeding under section 273(c), the ITO imposed a penalty for the assessee's failure to file a revised estimate under section 212(3A). The penalty was based on the same unexplained investment in household furniture. The ITAT, applying the same reasoning as in the concealment penalty proceedings, concluded that since the income was not directly earned during the relevant previous year, the penalty under section 273(c) was not justified. Therefore, the penalty under this section was also deleted.

In conclusion, the ITAT allowed both appeals, finding that no penalties were exigible in the given circumstances due to the absence of fraud or wilful neglect, and the additional income not being directly earned during the relevant previous year.