1987 (7) TMI 3 - SC - Income Tax

Penalty reduced under section 274 read with section 271: admissions during assessment don't automatically prove deliberate concealment

SC allowed the appeal, holding that the Tribunal properly reduced the penalty under section 274 read with section 271 for alleged concealment/furnishing ... Imposition of a penalty under section 274 read with section 271 - Concealment of Income or Furnishing Inaccurate Particulars - manufacture and sale of sugar and confectionery - whether the Tribunal was correct in reducing the penalty - High Court found that the Tribunal had not adequately considered the facts and circumstances, particularly the assessee's admission of these amounts as income when faced with evidence. HELD THAT:- In the instant case, there is a finding of fact and unless it could be said that all the relevant facts had not been considered in a proper light, no question of law arises. In our opinion, the Tribunal took into account all the relevant facts. The Tribunal had been accused by the High Court of not taking into consideration the fact that the assessee had admitted these amounts in the assessment. To admit that there has been excess claim or disallowance is not the same thing as deliberate concealment or furnishing inaccurate particulars. At least in the background of the law as it stood at the relevant time, that was the position. There have been some changes subsequently which we have not noticed for the present purpose. In the instant case, it is not said that the Tribunal had acted on material which was irrelevant to the enquiry or considered material which was partly relevant and partly irrelevant or based its decision partly on conjectures, surmises and suspicions. The High Court was wrong in saying that proper weight had not been given to all the evidence and admissions made by the assessee. The High Court further observed that the time of admission was not noted by the Tribunal and this fact had not been properly appreciated by the Tribunal. That is also not correct. The Income-tax Officer had made additions during the assessment proceedings. In any event that would be appreciation of evidence in a certain way, unless in such misappreciation which amounted to non-appreciation, no question of law would arise. Non-appreciation may give rise to a question of law but not mere misappreciation, even if there be any, from a certain angle. Change of perspective in viewing a thing does not transform a question of fact into a question of law. Thus, we are of the opinion that in preferring one view to another view of factual appreciation, the High Court transgressed the limits of its jurisdiction under the income-tax reference in answering the question of law. Appeal allowed. Issues Involved:1. Applicability of Section 271 of the Income-tax Act, 1961.2. Concealment of income or furnishing inaccurate particulars by the assessee.3. Justification of penalty reduction by the Tribunal from Rs. 70,000 to Rs. 5,000.Issue-wise Detailed Analysis:1. Applicability of Section 271 of the Income-tax Act, 1961:The High Court held in favor of the Revenue, affirming that Section 271 of the Income-tax Act, 1961, was applicable to the case. This conclusion was not disputed further in the appeal.2. Concealment of Income or Furnishing Inaccurate Particulars:The High Court addressed whether the assessee had concealed particulars of its income or deliberately furnished inaccurate particulars within the meaning of Section 271(2). The High Court noted that the Income-tax Officer had made several disallowances, including Rs. 48,500 for inflation in the price of sugarcane, Rs. 67,500 for excess shortage claimed in cane, and Rs. 21,700 for the salary of outstation staff of loading contractors. The High Court found that the Tribunal had not adequately considered the facts and circumstances, particularly the assessee's admission of these amounts as income when faced with evidence. The High Court emphasized that the assessee's agreement to the additions was material in judging the criminality of the action, which the Tribunal had overlooked. However, the Supreme Court observed that the Tribunal had considered all relevant facts and that an admission of excess claims or disallowances did not equate to deliberate concealment or furnishing inaccurate particulars. The Tribunal's findings were based on a comprehensive review of evidence, including statements from relevant individuals, and it concluded that there was no deliberate concealment by the assessee.3. Justification of Penalty Reduction by the Tribunal:The High Court reframed the third question to focus on whether the Tribunal was correct in reducing the penalty from Rs. 70,000 to Rs. 5,000. The Tribunal had reduced the penalty after considering that the assessee had agreed to the additions and that the evidence did not conclusively establish deliberate concealment. The High Court, however, disagreed, stating that the Tribunal had not given proper weight to the admissions made by the assessee. The Supreme Court, however, held that the Tribunal had acted within its jurisdiction, considering all relevant evidence and facts. The Supreme Court reiterated that findings of fact by the Tribunal should not be disturbed unless there was no evidence to support them or they were perverse. The Supreme Court concluded that the Tribunal had properly considered the evidence and that the High Court had overstepped its jurisdiction by re-evaluating the factual findings of the Tribunal.Conclusion:The Supreme Court allowed the appeal, setting aside the High Court's judgment regarding the third question. The reframed question was answered in the affirmative and in favor of the assessee. The assessee was entitled to the costs of the appeal. The Supreme Court emphasized that the Tribunal's findings were based on a proper appreciation of evidence and that the High Court had erred in re-evaluating these findings.