1994 (8) TMI 86 - AT - Income Tax

Appellate Authority, Assessing Officer, Assessment Order, Income Returned, Penalty For Concealment, Search And Seizure

Summary

Issues:
1. Assessment of penalties under section 271(1)(c) for non-filing of income tax returns within the due date.
2. Applicability of Explanation 3 and Explanation 5 to section 271(1)(c) in penalty imposition.
3. Justification for canceling penalties by the CIT(Appeals) and its review by the Appellate Tribunal.

Detailed Analysis:
1. The judgment concerns two appeals involving the same assessee and similar points regarding the non-filing of income tax returns within the prescribed due dates. The returns were eventually filed under section 139(4) of the Income Tax Act after a search and seizure proceeding at the assessee's premises. The Assessing Officer computed the income based on the returns filed by the assessee.

2. The Assessing Officer initiated penalty proceedings under section 271(1)(c) for both years, citing the failure to file returns by the due dates and deeming it as concealment of income. The penalties were imposed based on Explanation 5 to section 271(1)(c), highlighting the substantial income of the assessee from various investments despite the non-filing of returns within the specified timelines.

3. The CIT(Appeals) canceled the penalties, stating that Explanation 5 was not applicable due to the absence of specific seizures of assets during the search. The Appellate Tribunal upheld the cancellation of penalties, emphasizing that neither Explanation 3 nor Explanation 5 to section 271(1)(c) applied to the case. The Tribunal cited legal precedents to support its decision, highlighting that the returns were filed within the time limit prescribed under section 139(4) and accepted by the Assessing Officer without any findings of concealed income.

4. The Appellate Tribunal concluded that the penalties were unjustified as the jurisdiction for penalty proceedings was not established under either Explanation 3 or Explanation 5 to section 271(1)(c). Therefore, the penalties imposed by the Assessing Officer were canceled for both years, and the departmental appeals were dismissed.