1990 (9) TMI 146 - AT - Income Tax

Summary

Issues:
Maintenance of penalty under section 271(1)(c) of the Income-tax Act, 1961 for the assessment years 1982-83 and 1983-84.

Detailed Analysis:

1. The appeals were against the order of the Appellant Assistant Commissioner regarding the penalty imposed under section 271(1)(c) of the Income-tax Act for the relevant assessment years. The issue revolved around the non-inclusion of the share income of the assessee's wife under section 64(1) of the Act in the original assessments. The Income-tax Officer initiated penalty proceedings, considering the non-inclusion as concealment of income.

2. The assessee contended that the omission was due to a bona fide belief that the spouse's income was not assessable in his hands. The assessee corrected the error upon detection and argued that the omission was not deliberate but a result of ignorance of law. The assessee and his wife being assessed separately and represented by different auditors indicated that the omission was not intentional.

3. The Departmental Representative argued that ignorance of law is not an excuse and failure to apply the provisions of section 64 amounted to concealment, justifying the penalty. The Departmental Representative relied on legal precedents to support the imposition of the penalty.

4. The Tribunal considered the principle that ignorance of law is not an excuse but emphasized that a return should be deemed false only if there is deliberateness in the incorrectness. The Tribunal referred to legal precedents to support the view that a bona fide belief can prevent a return from being labeled as false, thus not warranting a penalty.

5. The Tribunal analyzed conflicting decisions regarding the applicability of section 271(1)(c) in cases of non-inclusion of tangible income under section 64. Legal precedents were cited to distinguish cases where penalties were justified and where they were not. The Tribunal emphasized that the word 'concealment' implies a deliberate act to hide income, which was not present in this case due to the existence of a bona fide belief.

6. Considering the facts and the existence of a bona fide belief, the Tribunal concluded that there was no concealment of income and directed the deletion of the penalty. The appeals were allowed based on this finding.