1992 (9) TMI 152 - AT - Income Tax

Assessing Officer Penalty For Concealment Penalty Proceedings Revised Returns Undisclosed Income

Summary

Issues Involved:
1. Reopening of assessment under section 147.
2. Proceedings under section 263.
3. Filing of revised returns and voluntary disclosure.
4. Initiation and imposition of penalties under sections 271(1)(c) and 273.
5. Appeal against the imposition of penalties.

Detailed Analysis:

1. Reopening of Assessment under Section 147:
The assessment for the year 1974-75 was initially completed on a total income of Rs. 2,73,000. After rectification and appellate effect orders, the income was computed at Rs. 2,71,074. The assessment was reopened under section 147 and the income was computed at Rs. 2,76,574, later determined at Rs. 2,74,750 under section 251.

2. Proceedings under Section 263:
For the assessment year 1977-78, the CIT found the order of the Assessing Officer (AO) erroneous and prejudicial to the revenue's interests. The AO had not investigated various credits properly. The assessment was set aside for fresh investigation. Similarly, for the assessment year 1978-79, the CIT(A) set aside the assessment with directions for a fresh order.

3. Filing of Revised Returns and Voluntary Disclosure:
The assessee filed a petition for voluntary disclosure of income due to increased business activities and administrative oversight. Revised returns were filed for the years 1974-75 to 1979-80, disclosing additional income. The AO regularized these returns by issuing notices under section 148 and completed the assessments by adding the undisclosed income offered for different years.

4. Initiation and Imposition of Penalties under Sections 271(1)(c) and 273:
The AO initiated penalty proceedings under sections 271(1)(c) and 273 for all years. Penalties were imposed based on the alleged concealment of income detected before the assessee's voluntary disclosure. The CIT(A) upheld the penalties, stating the assessee had filed revised returns after becoming aware of the detection of concealed income.

5. Appeal Against the Imposition of Penalties:
The assessee appealed against the penalties, arguing that the additional income was offered voluntarily and not due to any specific detection by the department. The ITAT found that the AO had not conducted any specific enquiry or found any definite concealment. The penalties were imposed based on the assessee's petition under section 273A, which was intended to buy peace and avoid litigation.

Judgment Analysis:

Reopening of Assessment:
The reopening of assessment under section 147 was a procedural aspect where the AO recalculated the income based on additional information. The final determination of income was Rs. 2,74,750.

Proceedings under Section 263:
The CIT's directions under section 263 for fresh assessment were not followed by the AO, who instead relied on the revised returns filed by the assessee. This procedural lapse indicated a lack of thorough investigation by the AO.

Filing of Revised Returns:
The assessee's voluntary disclosure and revised returns were filed to avoid future litigation. The AO accepted the revised returns without conducting further enquiry, indicating reliance on the assessee's petition under section 273A.

Penalties under Sections 271(1)(c) and 273:
The ITAT noted that penalties under section 273 could not be imposed for assessments under section 143(3)/147. The AO's imposition of penalties was based on the voluntary disclosure petition, which was not a sufficient basis for proving concealment of income. The ITAT emphasized that the department failed to prove deliberate concealment or furnishing of inaccurate particulars by the assessee.

Appeal Outcome:
The ITAT concluded that the penalties imposed were not justified as the department did not establish any specific concealment. The voluntary disclosure by the assessee was not an admission of concealment but an effort to avoid prolonged litigation. The penalties were cancelled, and the appeals were allowed.

Conclusion:
The ITAT's judgment highlighted procedural lapses by the AO and the lack of concrete evidence for imposing penalties. The voluntary disclosure by the assessee, accepted by the department, was not sufficient to establish concealment. The penalties under sections 271(1)(c) and 273 were cancelled, and the assessee's appeals were allowed.