1977 (7) TMI 91 - AT - Income Tax

Summary

Issues:
- Appeal against the maintenance of a penalty under s. 271(1)(c) of the Income-tax Act for the assessment year 1972-73.
- Acceptance of the claim of the assessee regarding the source of two deposits.
- Reduction of penalty by the Appellate Assistant Commissioner.
- Determination of concealment of income and imposition of penalty.

Analysis:

The appeal in this case concerns the imposition of a penalty under s. 271(1)(c) of the Income-tax Act for the assessment year 1972-73. The Income-tax Officer had imposed a penalty of Rs. 11,000 in relation to two deposits made by the assessee on 4th April, 1971 and 6th April, 1971, totaling Rs. 11,000. The assessee claimed these deposits were made from savings. However, the Income-tax Officer rejected this claim, adding Rs. 11,000 as income from other sources. The Appellate Tribunal later reduced this addition to Rs. 5,000, considering the possibility of the assessee having a saving of Rs. 6,000 at the time of the deposits.

Upon further appeal, the Appellate Assistant Commissioner reduced the penalty to Rs. 5,000, stating that the assessee had provided inadequate particulars of his income in relation to this amount. The Commissioner held that the lack of a plausible explanation for the Rs. 5,000 deposit indicated it was the assessee's concealed income, emphasizing the presence of a bank account where any savings should have been deposited. The assessee contended that the rejection of his claim was not due to concealment but rather insufficient evidence supporting his assertion of larger savings.

The Appellate Tribunal, upon reviewing the case, concluded that it was not a suitable scenario for penalty imposition. While the claim of larger savings by the assessee was not fully accepted, it was deemed a probable case, especially considering the timing of the credits at the beginning of the year. The Tribunal found no evidence to suggest the Rs. 5,000 was concealed income of that year, emphasizing that rejecting an explanation does not equate to concealment. Consequently, the Tribunal canceled the penalty order and allowed the appeal, deeming the penalty unjustified in the absence of concrete evidence of concealment.