High Court upholds penalty under Income Tax Act for non-disclosure of income. Failure to disclose not bonafide.

The High Court upheld the penalty imposition under Section 271(1)(c) of the Income Tax Act on the appellant for non-disclosure of additional income of Rs. 40 lakhs. The Court found that the appellant's failure to disclose the income in the original return was not bonafide, as it was only rectified after being confronted during assessment proceedings. The appellant's argument of inadvertence/mistake was deemed insufficient, and the Court concluded that no substantial question of law arose. The appeal was dismissed, and no costs were awarded.

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Issues:
Imposition of penalty under Section 271(1)(c) of the Income Tax Act for non-disclosure of additional income in the return of income filed for Assessment Year 2001-02 due to inadvertence/mistake.

Analysis:
The appellant argued that the penalty under Section 271(1)(c) should have been set aside as the non-disclosure of additional income of Rs. 40 lakhs was due to inadvertence/mistake and was rectified by filing a revised return before the Assessment Order was passed. However, during a search and seizure action, the appellant disclosed additional income not previously declared during regular assessment proceedings. The appellant then filed a return of income for the Assessment Year but failed to disclose the additional income of Rs. 40 lakhs, which was only done after the Assessing Officer confronted the appellant. The Assessing Officer initiated penalty proceedings for breach, leading to the appellant filing a revised return disclosing the amount. The Assessing Officer imposed a penalty of Rs. 14 lakhs, which was challenged in further appeals.

The CIT(A) upheld the penalty imposition, stating that the omission to include the additional income was not bonafide as it was only offered after being confronted during assessment proceedings. The Tribunal also upheld this finding, noting that the disclosure in the revised return was after the non-disclosure was discovered during assessment. The appellant's counsel argued against the penalty, claiming it was a mistake and there was no intent to deprive the revenue. However, the explanation provided for non-disclosure was deemed insufficient, as no particulars of the mistake were provided. Additionally, the appellant had not paid the full tax attributable to the undisclosed amount initially but paid it later with the revised return. The authorities found the non-disclosure not bonafide, and the appellant forfeited immunity from penalty under the Act.

The High Court found that a reasonable and possible view was taken by the authorities, and no substantial question of law arose. Therefore, the appeal was dismissed, and no costs were awarded.

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