2005 (3) TMI 58 - HC - Income Tax

Whether the Assessing Officer was justified in imposing a minimum penalty of Rs. 56,000 on the assessee due to non-disclosure of their true income amounting to Rs. 76,040 under section 271(1)(c) - We do not, however, wish to express any opinion on the application made by the assessee under section 273A of the Act for waiver of penalty because as per the observation of the Tribunal, it is pending consideration. It is for the authority concerned to decide its merits and pass appropriate orders, as the case may be, keeping in view the requirement of section 273A

Summary

Issues:
1. Imposition of penalty by the Assessing Officer for non-disclosure of true income.
2. Applicability of Circular No. 451, dated February 17, 1986, in relation to penalty imposition under section 271(1)(c) of the Act.

Analysis:
1. The first issue revolves around the imposition of a penalty by the Assessing Officer on the assessee for non-disclosure of their true income under section 271(1)(c) of the Act. The assessee had initially contested an addition made by the Assessing Officer but later withdrew the appeal and filed a revised return offering the addition amount as their income from undisclosed sources. The Tribunal reversed the decision of the Commissioner of Income-tax (Appeals) and imposed a minimum penalty of Rs. 56,000. The question at hand was whether the penalty imposition was justified in light of the revised return filed by the assessee.

2. The second issue concerns the applicability of Circular No. 451, dated February 17, 1986, in the context of penalty imposition. The circular addresses the scenario where an addition is contested in appeal, and the assessee subsequently withdraws the appeal and makes a declaration regarding the addition as their income. The circular emphasizes taking a lenient view in such cases. The Tribunal, in this case, held that the authorities were justified in imposing the minimum penalty on the assessee, considering the circumstances and the application of the circular.

In conclusion, the High Court analyzed the issues in light of the relevant circular and previous judicial interpretations. The court upheld the imposition of the penalty on the assessee, citing the clear provisions of Circular No. 451 and the discretionary power of the authorities to levy penalties. The court refrained from expressing an opinion on the application for waiver of penalty under section 273A, leaving it to the concerned authority for consideration. Ultimately, the court ruled against the assessee and in favor of the Commissioner of Income-tax, emphasizing the importance of following the provisions and guidelines set forth in the circular and relevant legal framework.