2015 (1) TMI 1161 - HC - Income Tax

Penalty proceedings under Section 271(1)(c) - revised income showing a total income of ₹ 10,86,060/-, which includes NRE gift received by the assessee - proceedings initiated under Section 147 - Appellate Tribunal held that the provisions of Clause B to Explanation 1 to Sec.271(1)(c) are attracted thereby reversing the order of first appellate authority cancelling the penalty - Held that - When the concealment of the income was with reference to the original return and there was no explanation at all as regards the non-disclosure, the mere claim that the income was offered in the revised return, as a matter of purchasing peace, by itself, would not exonerate the assessee from the culpability. Having regard to the fact that the assessee had not disclosed any reason for the omission in the original return and that the revised return was filed only after the search, this Court held that penalty was leviable. When there is no satisfactory explanation as regards its non-disclosure of the income in the original return and that the undisclosed income came to be shown only in the revised return, rightly the Tribunal reversed the order of first appellate authority cancelling the penalty. - Decided against assessee.

Issues:
Levy of penalty under Section 271(1)(c) of the Income Tax Act based on concealment of income in the original return filed by the assessee.

Analysis:
1. Background: The appellant, an individual engaged in the cloth and readymade garments business, received NRE gifts but failed to prove their genuineness to the satisfaction of the Income Tax Department. Consequently, penalty proceedings were initiated under Section 271(1)(c) of the Income Tax Act.

2. Commissioner's Decision: The Commissioner of Income Tax (Appeals) allowed the appeal, canceling the penalty proceedings. The Commissioner noted that the Assessing Officer did not conduct further inquiry post the appellant's voluntary surrender during a survey to establish the gifts' genuineness or falsity.

3. Appeal to Tribunal: The Revenue challenged the Commissioner's decision before the Income Tax Appellate Tribunal. The Tribunal, citing precedent, upheld the penalty proceedings, emphasizing that the appellant admitted the income only after being questioned during the survey, shifting the onus to prove no concealment to the appellant.

4. High Court Judgment: The appellant contended that since the income was voluntarily offered without willful concealment, penalty imposition was unjustified. However, the Court observed that the appellant admitted the gifts' income post-survey, acknowledging the difficulty in proving their genuineness.

5. Legal Precedents: The Court referenced prior cases like M.S.Mohammed Marzook, M.Shahul Hameed Batcha, and M.Sajjanraj Nahar, emphasizing that mere revised return submission post-survey does not absolve the assessee from penalty if no explanation for original non-disclosure is provided.

6. Decision Rationale: The Court found the appellant's behavior significant, as the revised return was filed only after the survey operation. With no satisfactory explanation for the initial non-disclosure, the Tribunal's application of penalty law was deemed appropriate based on Supreme Court and High Court precedents.

7. Final Verdict: Dismissing the appeal, the Court upheld the penalty levied by the Assessing Officer, considering it a minimum penalty. The appellant's failure to justify the non-disclosure in the original return led to the penalty's validation, in line with legal principles established by higher courts.

8. Conclusion: The judgment underscores the importance of substantiating income sources and the consequences of post-survey disclosures on penalty imposition, reiterating the legal standards for assessing concealment under Section 271(1)(c) of the Income Tax Act.

← Previous Next →