2003 (1) TMI 274 - AT - Income Tax

Summary

Issues:
1. Appeal against penalty under section 271(1)(c) for concealment of income.
2. Validity of penalty imposed by the AO without prior approval of the Jt. CIT.

Analysis:
1. The appeal was filed against the penalty imposed by the AO under section 271(1)(c) for concealment of income amounting to Rs. 68,411. The appellant contended that the revised return was filed after detection by the Department during search operations and not voluntarily. The AO observed delay in filing the return and non-payment of tax within the allowed time, leading to the penalty imposition. The Dy. CIT(A) upheld the penalty citing lack of fulfillment of conditions under Explanation 5 to section 271(1)(c). The appellant's representative argued for the non-imposition of penalty based on various judgments, including CIT vs. JKA Rajappa Chettiar and CIT vs. Bengal Iron Galvanising Works, emphasizing the absence of deliberate intention to conceal income.

2. The AO imposed the penalty without obtaining prior approval of the Jt. CIT as required under section 274(2) for penalties exceeding Rs. 20,000. The appellant raised this procedural irregularity, supported by legal precedents like CIT vs. Vijay Dal Mills and Gayathri Textiles vs. CIT, highlighting that such irregularities can be cured. The Tribunal acknowledged the procedural flaw and set aside the orders of the lower authorities, directing the AO to pass a fresh penalty order after obtaining the necessary approval from the Jt. CIT under section 274(2) of the Act.

In conclusion, the appeal was allowed for statistical purposes, emphasizing the importance of adhering to procedural requirements in imposing penalties under the Income Tax Act.