1991 (8) TMI 13 - HC - Income Tax

Penalty under s. 271(1)(c) restored for concealment where revised return changed loss to profit without books

HC held that the assessee's conduct squarely attracted penalty under s. 271(1)(c) for concealment of income and furnishing inaccurate particulars. The ... Imposition of penalty u/s 271(1)(c) - concealment of income and inaccurate particulars - HELD THAT:- We fail to see the logic behind the reasons assigned by the Tribunal to exonerate the assessee from payment of penalty. When the assessee submitted his return and showed a loss and then revised it and showed a profit, he had necessarily suppressed the particulars of income and given an incorrect account of his income. It may also be mentioned that the assessee did not maintain books of account. Income had, therefore, to be assessed on estimate basis. That being so, it is difficult to swallow that since the assessee's income was assessed on estimate basis, the assessee was not liable to any penalty. Instead, we find that the reasons assigned by the Tribunal have no basis under the law. We, therefore, have no hesitation in holding that the Appellate Tribunal took an absolutely incorrect view of law by exonerating the assessee from penalty. As we have stated earlier, the assessee did conceal his income and furnished inaccurate particulars and, therefore, was rightly subjected to penalty. - Tribunal was not at all justified in cancelling the penalty levied under the Explanation to section 271(1)(c) of the Income-tax Act. Issues involved: Determination of penalty u/s 271(1)(c) of the Income-tax Act, 1961 based on concealment of income and inaccurate particulars.Summary:The High Court of Madhya Pradesh was tasked with determining the validity of cancelling a penalty levied under the Explanation to section 271(1)(c) of the Income-tax Act, 1961. The case involved an assessee who initially reported a loss of Rs. 51,530 but later revised the return to show a profit of Rs. 7,500 without maintaining proper account books. The Income-tax Officer estimated the income at Rs. 51,000, leading to a penalty of Rs. 10,000 imposed by the Inspecting Assistant Commissioner under section 271(1)(c). The Tribunal, however, overturned the penalty, citing that the estimate could be a ground for addition but not for penalty imposition. The Department sought clarification on two questions, leading to the reference to the High Court for determination.Upon review, the High Court found that the assessee had indeed concealed income and furnished inaccurate particulars, falling under clause (c) of subsection (1) of section 271. The Court disagreed with the Tribunal's reasoning, emphasizing that the assessee's actions warranted penalty imposition. The Court highlighted that the Tribunal's view lacked legal basis and upheld the penalty, concluding that the Tribunal was unjustified in canceling the penalty under section 271(1)(c).Therefore, the High Court ruled in favor of the Department, stating that the Tribunal erred in canceling the penalty under the Explanation to section 271(1)(c) of the Income-tax Act. As a result, the reference was answered accordingly with no order as to costs.