Income Tax Tribunal Upholds Decision to Set Aside Penalty for Alleged Concealment in 1992-93 Assessment Year Case.

The ITAT dismissed the appeal challenging the penalty under section 271(1)(c) of the Income Tax Act for the assessment year 1992-93. The Tribunal upheld the CIT(A)'s decision to set aside the penalty imposed by the AO. The Tribunal found that the disclosed income from the money-lending business did not constitute concealment, as per Explanation 5. Consequently, the penalty was deemed unwarranted, and the appeal was dismissed, affirming the CIT(A) and ITAT's decisions.

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Issues:
Appeal against order of Income-tax Appellate Tribunal regarding penalty for assessment year 1992-93.

Analysis:
1. The appeal challenged the penalty imposed under section 271(1)(c) of the Income Tax Act for concealment of income. The Tribunal upheld the order of the Commissioner of Income-tax (Appeals) setting aside the penalty imposed by the Assessing Officer.

2. A search under section 132(1) revealed undisclosed income from a money-lending business jointly operated by the assessee and his son. The assessee disclosed Rs. 4 lakhs as income from this business during assessment proceedings for 1992-93. The Assessing Officer imposed a penalty for concealment of income, which was contested by the appellant.

3. The Assessing Officer argued that the disclosure made by the assessee did not qualify for immunity under Explanation 5 to section 271(1)(c) as it did not pertain to tangible assets found during the search. The Commissioner of Income-tax (Appeals) disagreed, stating that the undisclosed income from the money-lending business was considered and taxed, and the penalty was unjustified.

4. Explanation 5 to section 271 deals with assets found during a search, without distinguishing between tangible and intangible assets. If the assessee admits to undisclosed income represented by assets found during the search, no presumption of concealment arises. The Assessing Officer's distinction between tangible and intangible assets was deemed unsustainable.

5. The Tribunal affirmed that the penalty was not for concealment of particulars and no penalty was leviable under Explanation 5 to section 271(1)(c). The case of the son, who also disclosed income under the K.V.S. Scheme, further supported the decision to dismiss the appeal.

6. The judgment concluded that the penalty imposed on the appellant was unwarranted, as the disclosure made by the assessee regarding the undisclosed income from the money-lending business did not amount to concealment. The appeal was dismissed, upholding the decisions of the Commissioner of Income-tax (Appeals) and the Tribunal.

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