2003 (7) TMI 277 - AT - Income Tax

Summary

Issues:
Appeal against penalty under section 271(1)(c) for assessment year 1990-91.

Analysis:

1. The appellant, a managing director of a company, filed an appeal against the penalty imposed under section 271(1)(c) for the assessment year 1990-91. The appellant admitted to additional income of Rs. 1,80,000 during a search operation by the income-tax authorities. The Assessing Officer initiated penalty proceedings based on the concealed income. The appellant claimed immunity under Explanation 5 to section 271(1)(c) citing relevant case laws like CIT v. Suresh Chandra Mittal and Sir Shadilal Sugar & General Mills Ltd. The appellant also submitted a Tribunal's order for another assessment year where the penalty was canceled.

2. The Department argued that the appellant admitted to unexplained investments of Rs. 1,80,000, which were not disclosed in the original return. The Department contended that the appellant was not entitled to immunity under Explanation 5 as the investments were not declared in the original return. The Department emphasized that the concealment was clear, and the penalty was justified.

3. The Tribunal analyzed the case, considering the provisions of Explanation 5 to section 271(1)(c). The Tribunal noted that the appellant failed to disclose the unaccounted income in the original return filed before the search operation. The Tribunal referred to relevant case laws like Amjad Ali Nazir Ali v. CIT, CIT v. Mussadilal Ram Bharose, and CIT v. K.R. Sadayappan to support its decision. The Tribunal held that the appellant's admission during the search did not absolve him from the concealment in the original return.

4. The Tribunal distinguished the appellant's case from the decision in Sir Shadilal Sugar & General Mills Ltd's case, stating that it was no longer applicable after the addition of Explanation to section 271. The Tribunal also differentiated the case from Suresh Chandra Mittal's case, where the facts were distinct. The Tribunal upheld the penalty, emphasizing that the appellant's admission of additional income and utilization of the undisclosed funds were established facts.

5. The Tribunal dismissed the appeal, concluding that the penalty under section 271(1)(c) for the assessment year 1990-91 was justified based on the appellant's concealment of income in the original return and subsequent admission during the search operation. The Tribunal rejected the appellant's claim for immunity under Explanation 5 and upheld the penalty imposed by the Assessing Officer.