1976 (12) TMI 75 - AT - Income Tax

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 based on original return despite filing a revised return subsequently.

Detailed Analysis:

1. The appellant, a Woman Assistant Surgeon and Authorised Medical Attendant to Central Government employees, filed an original return declaring an income of Rs. 1,953 for the assessment year 1969-70. Subsequently, she filed a revised return showing an income of Rs. 13,118, leading to a difference due to non-disclosure of consultation fees received from the Central Government employees.

2. Penalty proceedings were initiated under section 271(1)(c) for concealing income in the original return. The Income Tax Officer imposed a penalty of Rs. 13,400, alleging that the appellant furnished inaccurate particulars of her income in both the original and revised returns.

3. The Appellate Assistant Commissioner upheld the penalty, stating that the substantial difference between the original and revised returns indicated concealment in the original return, justifying the penalty under section 271(1)(c).

4. The key question was whether a penalty could be imposed based on the original return when a revised return was subsequently filed. The Tribunal analyzed section 139(5) of the Act, which allows for filing a revised return if any omission or wrong statement is discovered.

5. The Tribunal emphasized that a revised return substitutes the original return, and unless it is proven that the additional income was shown only after detection by the department, concealing income in the original return does not warrant a penalty under section 271(1)(c).

6. The Tribunal interpreted the term "discovers" in section 139(5) broadly, including realizing incorrect particulars in the original return later, whether due to personal information or legal advice. It emphasized that a voluntary revised return, not consequential to departmental detection, protects the assessee from penalty.

7. The Tribunal dismissed the Revenue's arguments based on letters and documents, concluding that there was no evidence of prior detection of concealed income by the department before the revised return was filed voluntarily by the appellant.

8. Referring to legal precedents and interpretations of section 139(5), the Tribunal held that the burden to prove concealment under section 271(1)(c) rests on the Revenue. In this case, the department failed to establish that the appellant's actions warranted a penalty, leading to the cancellation of the penalty and allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, canceling the penalty imposed under section 271(1)(c) as the department failed to prove concealment of income in the original return, and the revised return was filed voluntarily without prior detection by the department.