2002 (4) TMI 886 - AT - Income Tax

Tribunal reinstates penalties based on seized material, rejecting immunity claim. Revised returns did not exempt from penalties.

The Tribunal reversed the CIT(A)'s decision to cancel penalties under section 271(1)(c), restoring the penalties imposed by the Assessing Officer. The ... Penalty - For concealment of income, Issues Involved:1. Cancellation of penalty u/s 271(1)(c) by CIT(A).2. Deletion of penalty due to no concealment of income.3. Entitlement to immunity for surrendered income during search.4. Estimation of income and its impact on penalty.Summary:Issue 1: Cancellation of Penalty u/s 271(1)(c) by CIT(A)The CIT(A) cancelled the penalty levied u/s 271(1)(c) by accepting the assessee's contention that the case is covered by Explanation 5(1) to section 271(1)(c). The Assessing Officer (AO) argued that the notebooks containing unaccounted transactions were for the assessee's own use and not recorded in the regular books of account.Issue 2: Deletion of Penalty Due to No Concealment of IncomeThe CIT(A) deleted the penalty, holding that there was no concealment as the assessee had papers containing unaccounted transactions and undisclosed income at the time of filing the return. The AO contended that the income recorded in the notebooks was more than that disclosed in the return of income.Issue 3: Entitlement to Immunity for Surrendered Income During SearchThe CIT(A) accepted the assessee's submission that the income surrendered during the search matched the income assessed for assessment years 1986-87 to 1989-90, thus entitling the assessee to immunity. The AO argued that immunity was available only for assessment year 1989-90 and not for earlier years.Issue 4: Estimation of Income and Its Impact on PenaltyThe CIT(A) held that the income on which the concealment penalty was worked out was estimated income. The AO contended that the seized papers indicated concrete figures of concealed income, leading to the reopening of assessment u/s 148.Judgment:The Tribunal found that the assessments were based on seized material during the search, and the income assessed was not disputed by the assessee. The Tribunal rejected the argument that the seized documents should be considered as books of account for immunity under Explanation 5 to section 271(1)(c). The Tribunal also held that the revised returns filed by the assessee did not absolve it from penalty consequences as they were not filed under section 139(5) due to inadvertence.The Tribunal concluded that the CIT(A) was wrong in cancelling the penalties and reversed the order of CIT(A), restoring the penalties levied by the AO. The appeals filed by the revenue were allowed.