1974 (2) TMI 12 - HC - Income Tax

Tribunal rules in favor of assessee on penalty for income concealment

The Tribunal upheld the jurisdiction assumed by the Inspecting Assistant Commissioner, partially accepted the assessee's explanation regarding deposits, ... Revised Return Issues Involved:1. Validity of jurisdiction assumed by the Inspecting Assistant Commissioner.2. Proof and presumption regarding deposits.3. Partial acceptance of the assessee's explanation by the Tribunal.4. Alleged mistakes in the Tribunal's order.5. Proof of concealment of income.6. Applicability of the Explanation to section 271(1)(c) of the Income-tax Act, 1961, and its retrospective effect.Detailed Analysis:1. Validity of Jurisdiction Assumed by the Inspecting Assistant Commissioner:The assessee contended that the Inspecting Assistant Commissioner did not validly assume jurisdiction as he was not satisfied that the assessee had concealed income during the assessment proceedings, a necessary condition for initiating penalty proceedings under section 271(1)(c). The Tribunal, however, did not find merit in this contention and upheld the jurisdiction assumed by the Inspecting Assistant Commissioner.2. Proof and Presumption Regarding Deposits:The assessee argued that the deposits were in the names of family members and not the Hindu undivided family (HUF). The Tribunal accepted this explanation partially, noting that the investments in various years were out of intangible additions made by the departmental authorities in the past. However, the Tribunal did not conclusively establish that the deposits were made by the HUF.3. Partial Acceptance of the Assessee's Explanation by the Tribunal:The Tribunal acknowledged that the assessee's explanation regarding the source of investments being out of past intangible additions was partially acceptable. This partial acceptance played a role in the Tribunal's decision to not impose the penalty under section 271(1)(c).4. Alleged Mistakes in the Tribunal's Order:The assessee claimed that the Tribunal's order suffered from apparent mistakes, which, if rectified, would reduce the additions made in the assessment year. However, this contention was not significantly addressed in the judgment, implying that it did not materially affect the Tribunal's decision.5. Proof of Concealment of Income:The assessee argued that concealment was not proved. The Tribunal held that the concealment was not conclusively established, and thus, the penalty under section 271(1)(c) could not be imposed. The Tribunal emphasized that the concealment had to be deliberate, as per the unamended section 271(1)(c).6. Applicability of the Explanation to Section 271(1)(c) of the Income-tax Act, 1961, and Its Retrospective Effect:The main issue revolved around whether the Explanation to section 271(1)(c), introduced by the Finance Act, 1964, applied retrospectively to the assessment year in question. The Tribunal held that the Explanation, which created a rebuttable presumption of concealment if the returned income was less than 80% of the assessed income, applied only to returns filed after April 1, 1964. Since the original return was filed before this date, the Explanation did not apply. The Tribunal further noted that the language of the Explanation was not intended to apply retroactively, especially since the word 'deliberately' was omitted from section 271(1)(c) post-amendment to harmonize with the Explanation.The Tribunal also rejected the department's argument that the Explanation should apply to the return filed in response to the notice under section 148. The Tribunal reasoned that applying the Explanation to the revised return would lead to anomalies, such as the possibility of double penalties for the same concealment or allowing an assessee to escape penalty if the concealment in the revised return was less than in the original return. Thus, the relevant return for penalty purposes was the original return filed before April 1, 1964.Conclusion:The Tribunal answered the referred question in the affirmative, holding that the provisions of section 271(1)(c) and the Explanation thereto were not attracted for the assessment year under consideration. The assessee was entitled to costs, assessed at Rs. 200.