1997 (2) TMI 159 - AT - Income Tax

Tribunal cancels penalty for income concealment, citing lack of independent evidence.

The Tribunal upheld the CIT(Appeals) decision to cancel the penalty under section 271(1)(c), finding that the evidence did not independently prove ... Assessing Officer, Assessment Year, Levy Of Penalty, Penalty For Concealment Issues:Departmental appeal against cancellation of penalty under section 271(1)(c).Analysis:The Assessing Officer levied a penalty of Rs. 5,48,030 on the assessee for concealing income by claiming excessive burning loss in the re-rolling process. The CIT(Appeals) canceled the penalty, citing the Amnesty Scheme's applicability and the reasonableness of the burning loss claimed by the assessee. The CIT(Appeals) noted that the Assessing Officer's addition was based on estimates and that the assessee had reconciled quantitative discrepancies. The department argued that the assessee's acceptance of the concealment through revised returns warranted the penalty, relying on various court decisions. However, the Tribunal found that the evidence did not independently prove concealment, citing recent Madras High Court judgments. The Tribunal agreed with the CIT(Appeals) that the penalty for concealment was unwarranted in this case, upholding the cancellation of the penalty.The Tribunal emphasized that the second return filed by the assessee under the Amnesty Scheme did not absolve the concealment in the original return. The Tribunal independently assessed whether the added-back amount constituted concealed income and found that the Assessing Officer's rejection of the burning loss claim was not conclusive. The Tribunal highlighted that the quantitative discrepancies were reconciled, and no evidence of sales outside the books was found. The Tribunal distinguished the department's reliance on previous court decisions and instead considered recent Madras High Court judgments, concluding that the penalty for concealment was not justified in this case.Ultimately, the Tribunal upheld the CIT(Appeals) decision to cancel the penalty, stating that the facts of the case, along with the recent Madras High Court judgments, did not support the imposition of a penalty for concealment of income. The departmental appeal was dismissed, affirming the cancellation of the penalty under section 271(1)(c).