2018 (1) TMI 603 - HC - Income Tax

Penalty u/s 271(1)(c) - proof of concealment or furnishing of inaccurate particulars of income - Held that - The sum total of the reasoning of the Tribunal is that since the details were available on the material filed by the assessee before the Assessing Officer, the assessee cannot be said to have furnished inaccurate particulars of his income or concealed any part of his income. If the concealment or furnishing of inaccurate particulars of income is an act committed by the assessee at the time of filing the return, the liability of the assessee or the culpability of the assessee is his conduct at the time when he filed the return. In such a case, even if it is assumed that concealment of the income was invented by the Assessing Officer from the details that are furnished by the assessee, that does not amount to a disclosure made by the assessee nor does it absolve the assessee from the concealment of income or furnishing of inaccurate particulars of income. Obviously therefore, the reasoning of the Tribunal is patently illegal. Therefore, we set aside the orders passed by the Tribunal and restore the order passed by the Assessing Officer. - Decided against assessee

Issues Involved:
1. Legality of the order passed by the Income-tax Appellate Tribunal concerning the assessment year 1992-93.
2. Validity of penalty levied under section 271(1)(c) of the Income-tax Act.
3. Tribunal’s justification for deleting penalties on specific additions.
4. Interpretation and application of section 271(1)(c) and Explanation 1 of the Income-tax Act.

Detailed Analysis:

1. Legality of the Order Passed by the Income-tax Appellate Tribunal:
The Revenue filed an appeal questioning the legality of the Income-tax Appellate Tribunal's order, which modified the original assessment for the year 1992-93. The Tribunal had deleted penalties levied on certain additions while sustaining penalties on others. The High Court had previously upheld the original assessment in ITA Nos. 140 and 149 of 2001.

2. Validity of Penalty Levied Under Section 271(1)(c):
The original assessment included additions for unaccounted sales and unexplained credits. Penalty proceedings under section 271(1)(c) were initiated, resulting in a penalty of ?10.51 lakhs, later revised to ?13,24,176. The Tribunal set aside this penalty, which was challenged by the Revenue. The High Court directed the Tribunal to reconsider, leading to a fresh hearing where the Tribunal deleted penalties on certain additions but sustained them on others.

3. Tribunal’s Justification for Deleting Penalties on Specific Additions:
The Tribunal's reasoning for deleting the penalty on the addition of ?16,60,854 towards unaccounted sales and surplus production of tin was based on the availability of all material records. The Tribunal opined that since the details were available on the material filed by the assessee, it could not be considered that the assessee furnished inaccurate particulars or concealed income. Similarly, for the addition of ?1,88,000, the Tribunal noted that the cash balance was sufficient for the transfer and that the assessee had not furnished inaccurate particulars or concealed income.

4. Interpretation and Application of Section 271(1)(c) and Explanation 1:
Section 271(1)(c) of the Income-tax Act provides for penalties for concealing income or furnishing inaccurate particulars. Explanation 1 to this section deems the amount added or disallowed as concealed income if the assessee fails to substantiate his explanation or prove it bona fide. The High Court emphasized that the burden of proof lies on the assessee to show that his case falls under the provisions of the Explanation.

The High Court referred to various judgments to elucidate the principles governing section 271(1)(c). It was noted that concealment or furnishing inaccurate particulars is determined at the time of filing the return. If the details leading to the additions were available in the material filed by the assessee, it does not absolve the assessee from penalties for concealment or inaccurate particulars.

Conclusion:
The High Court found the Tribunal's reasoning patently illegal, as the availability of details in the material filed by the assessee does not negate the act of concealment or furnishing inaccurate particulars at the time of filing the return. Consequently, the High Court set aside the Tribunal's orders and restored the Assessing Officer's order, answering the questions of law in favor of the Revenue and against the assessee.

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