1992 (7) TMI 111 - AT - Income Tax

Assessing Officer Penalty For Concealment Penalty Proceedings Rental Income Res Judicata Revised Return Total Income Two Partners

Summary

Issues:
1. Challenge against penalty under section 271(1)(c) of the Income-tax Act.
2. Validity of proceedings initiated under section 143(2)(b) instead of section 147.
3. Determination of deliberate suppression of rental income by the assessee.
4. Consideration of the voluntary disclosure of rental income in a revised return.

Analysis:
1. The appeal was against the confirmation of a penalty of Rs. 45,000 under section 271(1)(c) of the Income-tax Act for the assessment year 1988-89. The assessee had initially filed a return of income without declaring rental income from a factory building, leading to penalty proceedings initiated by the Assessing Officer, which was upheld by the CIT(A) and challenged in the second appeal.

2. The assessee argued that the proceedings were wrongly initiated under section 143(2)(b) instead of section 147. However, the tribunal found that the Assessing Officer had the prerogative to choose either course of action, and the initiation under section 143(2)(b) was justified as the time limit of six months was still available for assessment.

3. The tribunal determined that the non-disclosure of rental income in the original return was a deliberate act of suppression by the assessee. While the assessee had shown rental income in the previous year, for the assessment year in question, the income was directly taken to the individual accounts of the partners, not reflecting in the firm's income. The tribunal concluded that the trust reposed in the assessee was belied by this deliberate suppression.

4. The disclosure of rental income in a revised return was not considered voluntary as it was prompted by the Assessing Officer's notification of the non-disclosure and reopening of the case under section 143(2)(b). The tribunal held that even though a revised return was filed, the original default of non-disclosure was not condoned. Ultimately, considering all facts and circumstances, the tribunal upheld the order of the CIT(A) confirming the penalty.

In conclusion, the tribunal dismissed the appeal, affirming the penalty imposed under section 271(1)(c) of the Income-tax Act for deliberate suppression of rental income by the assessee and rejecting the challenge against the validity of proceedings initiated under section 143(2)(b) instead of section 147.