1977 (5) TMI 35 - AT - Income Tax

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 based on alleged concealment of income by the assessee.

Analysis:
The appeal before the Appellate Tribunal ITAT Hyderabad-B involved a penalty of Rs. 9,848 imposed on the assessee under section 271(1)(c) of the Income Tax Act, 1961. The assessee, a practicing doctor without accounts, had omitted to consider income tax payments totaling Rs. 9,849 while preparing the cash statement, leading to the penalty. The Income Tax Officer treated this sum as income from undisclosed sources and added it to the assessment, initiating penalty proceedings. The Appellate Assistant Commissioner upheld the penalty, finding concealment of income by the assessee.

The Tribunal, however, disagreed with the lower authorities' decision. It noted that the revenue failed to establish that the added sum of Rs. 9,849 constituted concealed income of the assessee for the relevant assessment year. The assessee's explanation that he forgot to mention tax payments due to lack of accounts and prepared the cash statement on a rough basis was deemed plausible. The Tribunal highlighted that the mere rejection of the assessee's explanation was insufficient to conclude that the sum represented concealed income, especially in the absence of concrete evidence of concealment presented by the revenue.

During the proceedings, the revenue argued that since the assessee provided various details in the cash statement, the omission of tax payments was unjustified. However, the Tribunal clarified that the cash statement was prepared based on memory, not from regular accounts. Additionally, the revenue's contention regarding the fees received from the Life Insurance Corporation was deemed irrelevant to the penalty imposition based on the Rs. 9,849 addition. The Tribunal emphasized that the charge against the assessee pertained solely to the alleged concealment of Rs. 9,849, and other income sources were not under scrutiny.

Ultimately, the Tribunal concluded that the revenue failed to prove the concealment of Rs. 9,849 by the assessee for the assessment year in question. Therefore, the penalty was canceled, and the appeal was allowed in favor of the assessee.