2019 (4) TMI 608 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - suppression of turnover - penalty imposed at the minimum amount of 100% of the tax sought to be evaded - HELD THAT - The sales, as stated, are of the same goods as the asseseee deals in in the normal course of his trade. The disclosed profit is ₹ 11,000 (8.03%) and ₹ 17,125 (12.50%) for AY 1992-93 and AY 1993-94 respectively. He replied in the negative. Why, then, should not the income on the additional, admitted turnover be assessed at the same rate, as indeed it was in the original assessment proceedings? The undisclosed purchases by the assessee for the relevant years are at ₹ 24.38 lacs and ₹ 32.40 lacs for AY 1992-93 and 1993- 94 respectively. That is, as it appears, the undisclosed profit for the two years is in fact in a much higher sum of ₹ 5.74 lacs (Rs.30.12 lacs - ₹ 24.38 lacs) and ₹ 4.74 lacs (Rs.37.14 - ₹ 32.40 lacs) for the two consecutive years respectively. All these facts are on the basis of the material on record and, in fact, admitted. The income had, rather, been assessed a much lower rate of 2.5%, applied uniformly for both the manufacturing and trading turnover. How then, and on what basis, one wonders, the assessee states that he has not concealed particulars of income when he had concealed the turnover on the purchases from SICOP. In fact, penalty would arise even if the assessee had declared the same profit rate as on the disclosed turnover in the reassessment proceedings. This is as the same would only be upon detection by the Department. penalty is to be levied with reference to original return is, again, well settled (CIT vs. Onkar Saran & Sons 1992 (3) TMI 1 - SUPREME COURT . The penalty imposed for both the years is, as afore-stated, at the minimum rate. - decided against assessee

Summary

Issues Involved:
Appeals against penalty u/s. 271(1)(c) of the Income Tax Act, 1961 for AYs 1992-93 & 1993-94.

Analysis:

Background Facts and Initial Assessment:
The case involves two consecutive years, AYs 1992-93 & 1993-94, where the Assessing Officer made the initial assessment at a higher income than the returned income, based on a net profit rate applied to the turnover. The revised turnover was disclosed after a notice u/s. 148(1) regarding purchases from SICOP, leading to an increase in the assessed income. The matter was taken to appeal, and the Tribunal set aside the first appellate authority's order, directing fresh assessment for both years.

Fresh Assessment and Penalty Proceedings:
After fresh assessments, the income was enhanced, and penalty proceedings u/s. 271(1)(c) were initiated. The penalty was imposed on the additional profit from the undisclosed turnover, as the assessee did not respond to the show cause notice. The assessee contended that penalty could not be levied as the business profit was estimated, but the CIT(A) found it to be a case of income suppression, leading to the penalty imposition.

Tribunal's Decision on Penalty Imposition:
The Tribunal considered the assessee's argument that penalty should only be on undisclosed income, not turnover, but rejected it. It noted that the revised profit remained the same as the original return, raising questions about the assessee's claim of no profit on the undisclosed turnover. The Tribunal emphasized that penalty could be levied even if the disclosed profit rate was applied to the undisclosed turnover, citing legal precedents. It concluded that no interference was warranted and upheld the penalty imposition.

Final Decision:
The Tribunal dismissed the assessee's appeals against the penalty, affirming the penalty imposition at the minimum rate for both years. The order was pronounced on March 29, 2019.

This detailed analysis covers the background, assessment, penalty proceedings, legal arguments, and the Tribunal's decision on the penalty imposition for the two consecutive assessment years.