2003 (7) TMI 256 - AT - Income Tax

Tribunal upholds penalty for concealing income from bogus NRI gift

Smt. Nitaben Tribhovandas Patel. Versus Income-Tax Officer.

The Tribunal upheld the penalty imposed under section 271(1)(c) of the IT Act, 1961, on the assessee for concealing income related to a bogus NRI gift. ... For Concealment Of Income Issues Involved:1. Confirmation of penalty under section 271(1)(c) of the IT Act, 1961.2. Validity of the revised return filed by the assessee.3. Allegation of concealment of income and furnishing inaccurate particulars.4. Application of judicial precedents and their relevance to the case.Detailed Analysis:1. Confirmation of Penalty under Section 271(1)(c) of the IT Act, 1961:The appeal was directed against the CIT(A)'s order confirming a penalty of Rs. 31,595 levied by the Assessing Officer under section 271(1)(c) for the assessment year 1995-96. The penalty was imposed because the assessee had not disclosed Rs. 1 lakh received as an NRI gift in the original return, which was later revealed to be bogus.2. Validity of the Revised Return Filed by the Assessee:The assessee filed a revised return on 22-4-1996, declaring the Rs. 1 lakh as income. The note appended to the revised return stated the inability to substantiate the genuineness of the transaction and the identity of the payer. The assessee claimed that the revised return was filed voluntarily to buy peace of mind and avoid protracted litigation. However, the authorities contended that the revised return was filed only after the department's detection of the bogus NRI gift racket.3. Allegation of Concealment of Income and Furnishing Inaccurate Particulars:The Assessing Officer found that the assessee had furnished false particulars regarding the receipt of the demand draft and was unable to show the exact source of the Rs. 1 lakh. The revised return was filed only after the department's detection, indicating deliberate concealment of income. The CIT(A) confirmed the penalty, noting that the assessee admitted the foreign gift was not genuine and was an arranged one to launder unaccounted income. The CIT(A) rejected the assessee's reliance on judicial precedents, stating that the facts of those cases were not applicable.4. Application of Judicial Precedents and Their Relevance to the Case:The CIT(A) distinguished the present case from the precedents cited by the assessee, such as CIT v. Mussadilal Ram Bharose and Hindustan Steel Limited v. State of Orissa, by emphasizing that the assessee admitted the gift was bogus. The Tribunal also referred to the judgment in CIT v. Abdulgafur Ahmed Wagmar, where penalty was upheld for a similar device to convert unaccounted money. The Tribunal cited ITAT Pune Bench decisions, where penalties for similar bogus NRI gifts were confirmed, and emphasized that filing a revised return after detection does not absolve the assessee from penalty.Conclusion:The Tribunal concluded that the assessee acted deliberately in defiance of law and was guilty of contumacious and dishonest conduct. The revised return did not expiate the initial concealment of income. Therefore, the penalty under section 271(1)(c) was justified, and the appeal was dismissed.