1978 (3) TMI 64 - HC - Income Tax

High Court cancels penalty for income concealment, emphasizes need for independent evidence

The High Court of Madras considered the cancellation of a penalty under section 271(1)(c) of the Act for concealment of income for the assessment year ... Income Tax Act, Voluntary Disclosure Scheme Issues involved: The judgment involves the cancellation of a penalty u/s 271(1)(c) of the Act for concealment of income for the assessment year 1964-65.Summary:The High Court of Madras considered the issue of cancelling a penalty u/s 271(1)(c) of the Act for concealment of income for the assessment year 1964-65. The assessee, engaged in banking and money-lending, initially reported an income of Rs. 2,01,000 but later revised it to Rs. 2,45,000. The Income Tax Officer (ITO) assessed the total income at Rs. 2,73,566 and initiated penalty proceedings. The ITO included a sum of Rs. 72,220 in the total income, which was later levied as a penalty by the Income Tax Appellate Tribunal (ITAT). However, the Tribunal found that there was no evidence to link this sum to the assessment year 1964-65. The High Court emphasized the need for independent evidence to establish concealment in penalty proceedings. As there was no evidence of concealment for the specific year in question, the Court upheld the Tribunal's decision to cancel the penalty. The Court ruled in favor of the assessee, stating that there was no error of law in the Tribunal's order and awarded costs to the assessee.This judgment highlights the importance of providing independent evidence to establish concealment of income in penalty proceedings. The Court emphasized that mere inclusion of an amount in the assessment does not automatically prove concealment, and the existence of income must be supported by positive evidence. In this case, the Tribunal found no evidence linking the sum of Rs. 72,220 to the assessment year 1964-65, leading to the cancellation of the penalty. The Court's decision underscores the requirement for concrete evidence to support allegations of concealment in tax matters.