1985 (10) TMI 24 - HC - Income Tax

Tribunal Upheld Penalty for Income Concealment Under Income-tax Act

The Tribunal upheld the penalty imposed by the Inspecting Assistant Commissioner, ruling it was not time-barred under the Income-tax Act. The penalty ... Penalty Issues Involved:1. Time-barred penalty order.2. Applicable law for penalty proceedings.3. Concealment of income and inaccurate particulars.4. Onus of proof for non-fraudulent behavior.5. Validity of penalty proceedings initiation.6. Jurisdiction of Inspecting Assistant Commissioner.7. Overlapping charges of concealment and inaccurate particulars.8. Competence of Tribunal in imposing penalties.Summary of Judgment:1. Time-barred penalty order:The Tribunal was justified in holding that the order of the Inspecting Assistant Commissioner, imposing penalty on January 18, 1974, had not become time-barred. The limitation for passing the order would be governed by the provisions of section 274(2) of the Income-tax Act, 1961, as amended with effect from April 1, 1971.2. Applicable law for penalty proceedings:The Tribunal was justified in holding that the penalty proceedings would not be governed by the law in force in the assessment year 1966-67, but by the law as obtained with effect from April 1, 1968.3. Concealment of income and inaccurate particulars:The Tribunal held that not adding back the amount of loss arising to the assessee in speculative transactions to the commercial profits disclosed in his books for the purpose of assessment was concealment of income or furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act.4. Onus of proof for non-fraudulent behavior:The Tribunal found that the assessee did not discharge the onus to establish that the difference between the total income assessed and the income returned did not arise from any fraud or gross or wilful neglect on his part within the meaning of Explanation to section 271(1)(c).5. Validity of penalty proceedings initiation:The initiation of penalty proceedings by the Income-tax Officer was valid. The Tribunal noted that the Income-tax Officer had made up his mind about the concealment and wilful neglect on January 20, 1971, and referred the matter to the Inspecting Assistant Commissioner.6. Jurisdiction of Inspecting Assistant Commissioner:The Tribunal held that the Inspecting Assistant Commissioner had jurisdiction to pass the penalty order on January 13, 1974, as the penalty proceedings were validly initiated by the Income-tax Officer.7. Overlapping charges of concealment and inaccurate particulars:Section 271(1)(c) of the Income-tax Act covers both concealment of income and furnishing of inaccurate particulars of income. The Tribunal held that these parts can overlap and both can be considered for imposing penalty.8. Competence of Tribunal in imposing penalties:The Tribunal was competent to impose penalties even if it was a borderline case of wilful negligence. The Tribunal's decision to impose a minimum penalty was upheld, considering the revised return was filed under compulsion after queries from the assessing authority.The application u/s 256(2) of the Income-tax Act was disposed of accordingly, with no order as to costs.