1992 (11) TMI 118 - AT - Income Tax

Tribunal overturns penalty for tax return revision

The Tribunal allowed the appeal, ruling that the penalty under Section 271(1)(c) was unwarranted as there was no concealment of income or filing of ... - Issues Involved:1. Imposition of penalty under Section 271(1)(c) for concealment of income.2. Legality of proceedings under Section 147 of the IT Act, 1961.3. Whether the assessee filed inaccurate particulars of income.4. Applicability of the amnesty scheme.5. Justification of penalty on disallowed expenses.Detailed Analysis:1. Imposition of Penalty under Section 271(1)(c) for Concealment of Income:The primary issue revolves around the imposition of penalty under Section 271(1)(c) for the concealment of income. The Assessing Officer had imposed penalties for the concealment of agency commission, three-fourths of the rent and electricity charges, and payment to Shri C.L. Madhok. The CIT(A) held that the penalty could not be levied on the payment to Shri C.L. Madhok as the matter was still unresolved. For the three-fourths of the rent and electricity charges, the CIT(A) did not accept the assessee's contention that no penalty was imposable, but the Tribunal disagreed with CIT(A), referencing the Delhi High Court case of CIT vs. Rita Malhotra, which held that such disallowance did not amount to concealment of income. For the agency commission, the Tribunal noted that the assessee had shown 80% of the commission as income and the remaining 20% in the suspense account, which was later included in a revised return filed under the Amnesty Scheme. The Tribunal concluded that the mere submission of a revised return under the Amnesty Scheme did not amount to a concession of concealment or filing of inaccurate particulars.2. Legality of Proceedings under Section 147 of the IT Act, 1961:The assessee argued that the proceedings under Section 147 were against the law since the matter of quantum of commission income was pending before the Tribunal. The Tribunal did not explicitly adjudicate on this issue but implicitly accepted the assessee's argument by focusing on the inapplicability of penalty provisions.3. Whether the Assessee Filed Inaccurate Particulars of Income:The CIT(A) had concluded that although there was no concealment, the assessee had filed inaccurate particulars of income. The Tribunal, however, found that the facts established that the alleged income had not accrued to the assessee during the year. The Tribunal emphasized that the mere submission of a revised return under the Amnesty Scheme could not be construed as a concession of filing inaccurate particulars. The Tribunal referenced multiple Supreme Court and High Court decisions, including CIT vs. A. Gajapathy Naidu, Janatha Contract Co. vs. CIT, CIT vs. Chanchani Brothers (Contractors) Pvt. Ltd., and CIT vs. Simplex Concrete Piles (India) Pvt. Ltd., to support its conclusion that the income had not accrued during the year and thus, there was no concealment or filing of inaccurate particulars.4. Applicability of the Amnesty Scheme:The Tribunal noted that the submission of a revised return under the Amnesty Scheme was done to purchase peace with the Department and could not be interpreted as an admission of concealment or filing inaccurate particulars. The Tribunal rejected the CIT(A)'s reliance on contradictory statements made by the assessee, emphasizing that the revised return under the Amnesty Scheme did not imply concession of guilt.5. Justification of Penalty on Disallowed Expenses:For the disallowed expenses related to the rent and electricity charges, the Tribunal referenced the Delhi High Court case of CIT vs. Rita Malhotra, which held that such disallowance did not constitute concealment of income. The Tribunal agreed with this precedent, concluding that the disallowance was a difference of opinion rather than concealment, and thus, no penalty was imposable.Conclusion:The Tribunal allowed the appeal, holding that the penalty under Section 271(1)(c) was not justified as there was no concealment of income or filing of inaccurate particulars. The Tribunal emphasized that the revised return under the Amnesty Scheme did not amount to an admission of concealment or filing inaccurate particulars and referenced several judicial precedents to support its conclusions. The penalty imposed by the Assessing Officer and upheld by the CIT(A) was deleted.