1988 (12) TMI 31 - HC - Income Tax

Tribunal cancels penalty for undisclosed income, court stresses conditions for relief

The Tribunal canceled the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961, as the assessee voluntarily disclosed undisclosed income, ... Penalty Issues involved: The issue involves the imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961 based on the disclosure petition filed by the assessee under section 271(4A) and the subsequent assessment proceedings.Judgment Details:Imposition of Penalty:The Income-tax Officer initiated reassessment proceedings under section 147(a) and imposed a penalty under section 271(1)(c) after the assessee made a disclosure petition admitting undisclosed income. The Inspecting Assistant Commissioner imposed a penalty of Rs. 54,667 after considering objections raised by the assessee.Tribunal's Decision:The Tribunal canceled the penalty, stating that the assessee voluntarily disclosed the income to the Department, indicating no concealment. The Tribunal found no admission of concealment in the disclosure petition filed by the assessee.Legal Principles:The court referred to a previous case where it was held that if an assessee discloses income under section 271(4A) and the conditions are met, relief cannot be denied. Imposition of penalty should consider all facts and circumstances, not just the admission of concealed income.Reframed Question:The court reframed the question to focus on whether the Tribunal erred in law by holding that no penalty was applicable based on the disclosure petition filed under section 271(4A).Final Decision:The court answered the reframed question in the affirmative, against the Revenue, indicating that the penalty was not justified in this case. The court also mentioned a similar view taken in a previous case.Conclusion:The judgment highlights the importance of considering all aspects before imposing a penalty for concealed income, emphasizing that voluntary disclosure by the assessee should be taken into account. The court's decision underscores the need for a comprehensive assessment of facts and circumstances before penalizing an assessee for alleged concealment of income.