TaxTMI 
TaxTMI 
2006 (1) TMI 91
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....ing that levy of penalty under section 271(1)(c) is unjustified?" The brief facts which give rise to this question are as under: The assessee is an individual and derives income from salary as regional manager of Orissa Industries Limited, Bangalore. A search was conducted in his residential premises on March 23,1992, and fixed deposits in various banks on various dates totally valued at Rs. 5,92,432 were seized. An order under section 132(5) of the Act was passed on July 1, 1992. Thereafter, the assessee filed his returns disclosing income from salary and also admitted investments in fixed deposits. On consideration of the said returns on the ground of non-disclosure of income by way of interest on deposits penalty was imposed under ....
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....xplanation is bona fide then the authorities are justified in imposing the penalty. Per contra learned counsel appearing for the assessee submitted that, what the authorities have to consider is whether the cause shown by the assessee is false or is it reasonable. If they are satisfied that it is not false and it is reasonable, it is permissible for the authorities to accept the explanation and not to impose the penalty. He pointed out that, though the language employed and the reasons given by the Tribunal may not be appropriate the sum and substance is that the explanation offered is a reasonable one and not false and, therefore, it is worthy of acceptance. In the light of the aforesaid submissions, in order to decide the controvers....
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....to the amount of the tax, if any, payable by him, a sum equal to two per cent, of the assessed tax for every month during which the default continued; Explanation.-In this clause 'assessed tax' means tax as reduced by the sum, if any, deducted at source under Chapter XVIIB or paid in advance under Chapter XVIIC; (ii) in the cases referred to in clause (b), in addition to any tax payable by him, a sum which shall not be less than ten per cent, but which shall not exceed fifty per cent, of the amount of the tax, if any, which would have been avoided if the income returned by such person had been accepted as the correct income; (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not b....
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....re any person who has not previously been assessed under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, fails, without reasonable cause, to furnish within the period specified in sub-clause (iii) of clause (a) of sub-section (1) of section 153 a return of his income which he is required to furnish under section 139 in respect of any assessment year commencing on or after the 1st day of April, 1974, and, until the expiry of the period aforesaid, no notice has been issued to him under sub-section (2) of section 139 or section 148 and the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) is satisfied that in respect of such assessment year such person has taxable income, then, such perso....
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....computing the total income of such person shall be deemed to represent the income in respect of which particulars have been concealed. Then the authorities would be justified in imposing the penalty at the rate specified in sub-section (1) of section 271. If the explanation offered is satisfactory or the reasonable cause shown is accepted by the authorities, the question of imposing penalty would not arise. In the instant case admittedly, only after the search the assessee filed the return immediately without any delay. It shows his bona fides. The explanation offered was that he was a salaried employee and his main source of income was salary and out of the savings from the salary he had saved the money by way of bank deposits. He was u....
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....osit. It is in respect of these observations made by the Tribunal that serious grievance is made out by the Revenue as if it would amount to the Revenue accepting the said position as a statement of law. There is considerable force in this submission of learned counsel for the Revenue. When an explanation is offered, all that the authorities are expected to consider is whether the said explanation is reasonable and whether the same is offered to avoid the penal consequences flowing from concealment of income. Having regard to the explanation offered the conduct of the party before and after disclosure if they are satisfied that there is no falsity in the explanation offered, the question of imposing penalty would not arise. In that view ....