2005 (8) TMI 586 - AT - Income Tax

Tribunal Upholds Penalty for Income Concealment: Lack of Voluntariness in Revised Filing

The Tribunal upheld the penalty imposed on an assessee firm for concealment of income particulars under section 271(1)(c) of the Income-tax Act. The firm ... Penalty - For concealment of income Issues:- Appeal against order under section 271(1)(c) of the Income-tax Act for penalty levied for concealment of income particulars.Analysis:The judgment involves an appeal by an assessee firm engaged in the jewellery business against the order of the learned CIT(A) for penalty under section 271(1)(c) of the Income-tax Act. The assessee initially filed a return of income declaring a total income of Rs. 84,470, which was later revised to Rs. 9,79,760 after a survey revealed suppression of closing stock, unaccounted sales, and other irregularities. The Managing Partner confirmed selling goods outside the books of account. The Assessing Officer levied a penalty based on precedents like the Hon'ble Madras High Court and the Hon'ble Supreme Court decisions. The learned CIT(A) upheld the penalty citing decisions of the Hon'ble Karnataka and Kerala High Courts, emphasizing that filing a revised return does not absolve the assessee from penalty for concealment of income particulars.In response, the assessee contended that the revised return was filed to rectify a mistake in stock valuation, not concealment. The assessee cited various decisions to support this argument. The Department, however, argued that the revised return was a result of being confronted with discrepancies during the survey, indicating lack of voluntariness. The Tribunal analyzed the facts, noting that the revised return was filed only after discrepancies were discovered, indicating lack of voluntariness. The Tribunal emphasized that the conduct of the assessee, valuing stock incorrectly until the survey, showed 'mens rea,' justifying the penalty under section 271(1)(c) of the Act.Further, the Tribunal distinguished the cases cited by the assessee, such as Shri V. Krishnamurthy and M/s. G. L. Acharya, highlighting the different factual circumstances. The Tribunal also discussed the decision of the Hon'ble Supreme Court in Suresh Chandra Mittal's case, emphasizing the need for voluntary surrender in good faith to avoid penalty. The Tribunal concluded that the mere filing of a revised return accepting additional income does not absolve the assessee from penalty consequences.Additionally, the Tribunal referenced a recent decision of the Hon'ble Karnataka High Court in CIT v. Sunrise Industrial Syndicate, emphasizing the distinction between offering income for peace and concealment. The Tribunal aligned with the Hon'ble Karnataka High Court's decision, finding no merit in the appeal and dismissing it based on the facts and legal precedents discussed in the judgment.