1979 (5) TMI 94 - AT - Income Tax

Summary

Issues: Penalty under section 271(1)(c) for the assessment year 1974-75 based on undisclosed income from land purchases.

In this case, the assessee, an individual, was subjected to a penalty under section 271(1)(c) for the assessment year 1974-75 due to the addition of sums under the head "other sources" by the Income Tax Officer (ITO). The ITO added discrepancies between the purchase prices of wet lands and their market values as unexplained investments and income from undisclosed sources. The assessee contended that the recorded purchase amounts were accurate and there was no concealment of income or particulars. The ITO, however, rejected this explanation, considering the low purchase consideration admitted by the assessee and the undisputed valuations by the Sub-Registrar. Consequently, a penalty of Rs. 16,160 was levied. The Appellate Assistant Commissioner (AAC) later accepted the assessee's case, finding no evidence to support the ITO's claims, and canceled the penalty.

The Revenue appealed this decision, arguing that the assessee's acceptance of the assessment without appeal indicated acknowledgment of the additions, invoking the principles from the Durga Timber Works case. The Revenue also contended that the Anwar Ali case did not apply, and the Explanation to section 271(1)(c) was applicable in this scenario. The Department representative highlighted the preamble in the sale deeds, indicating that the sale price was lower despite higher market values, suggesting no concealment by the assessee. The Appellate Tribunal, after thorough consideration, upheld the AAC's decision to delete the penalty. The Tribunal found that the assessee had not concealed any particulars, as all relevant details were disclosed in the sale deeds. The Tribunal emphasized that the mere acceptance of the assessment did not equate to an admission of concealment, especially since the assessee had consistently maintained the accuracy of the recorded purchase amounts. Additionally, the Tribunal concluded that the Explanation to section 271(1)(c) did not apply in this case, as the assessee had cooperated and provided all necessary information, indicating no fraudulent intent or neglect. Therefore, the Tribunal upheld the deletion of the penalty, ruling in favor of the assessee.

In conclusion, the Appellate Tribunal allowed the appeal, affirming the decision to delete the penalty imposed under section 271(1)(c) for the assessment year 1974-75, based on the lack of evidence supporting the claim of undisclosed income from land purchases and the assessee's consistent disclosure of accurate purchase amounts.