2005 (10) TMI 41 - HC - Income Tax

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the penalty levied under section 271(1)(c) on the concealed income of Rs. 26,853 to which the assessee had agreed for disallowance? - As can be seen from the impugned order of the Tribunal, it has recorded findings of fact as to the admission made by the assessee and the bona fides of the assessee. The facts as such are not disputed. Nothing has been brought on record by the Revenue to suggest that the finding that the assessee s action was bona fide, is incorrect in any manner whatsoever. In the circumstances, it is not possible to state that the Tribunal s order suffers from any infirmity

Summary

Issues:
- Penalty under section 271(1)(c) for concealed income

Analysis:
The case involved a question referred by the Income-tax Appellate Tribunal regarding the deletion of a penalty under section 271(1)(c) of the Income-tax Act, 1961. The assessee had agreed to disallow the concealed income of Rs. 26,853 related to the purchase of aluminium wires. The Assessing Officer found that the amount debited under "Consumable stores" was not allowable, as it was an attempt to reduce income by furnishing inaccurate particulars and concealing income. The penalty was imposed at a rate of 100 percent.

The Commissioner of Income-tax (Appeals) upheld the penalty order, leading the assessee to appeal before the Tribunal. The Tribunal noted that the debit entry in question was a solitary instance and that the assessee had requested to disallow it due to an apparent mistake before the Assessing Officer detected it. The Tribunal found the assessee's actions to be bona fide and concluded that imposing a penalty was unwarranted.

In the High Court's judgment, it was observed that the Tribunal's findings regarding the admission and bona fides of the assessee were not disputed by the Revenue. The Court found no evidence to suggest that the assessee's actions were not bona fide. Consequently, the Court upheld the Tribunal's decision to delete the penalty, ruling in favor of the assessee and against the Revenue.

Therefore, the High Court affirmed that the assessee was not liable to be penalized under section 271(1)(c) of the Act, and the penalty levied was rightly deleted. The judgment answered the question in the affirmative, in favor of the assessee. The reference was disposed of with no order as to costs.