1987 (8) TMI 135 - AT - Income Tax

Summary

Issues:
Imposition of penalty for concealment of income.

Analysis:
The case involves the imposition of a penalty for concealment of income. The assessee disclosed additional income in a revised return, claiming it was to buy peace. However, the Income-tax Officer found the same sum credited in the partners' accounts in the next assessment year. The penalty was imposed under Explanation 2 to section 271(1)(c), which was upheld by the CIT (Appeals), leading to the appeal by the assessee.

The facts reveal that the assessee initially disclosed income of Rs. 2,74,510 in the return filed on 28-4-1984. Subsequently, the Income-tax Officer raised concerns about certain credits totaling Rs. 3,30,000, asking for evidence to prove their source. The assessee then offered an additional sum of Rs. 2,50,000 to the income already returned, stating it was to buy peace. However, in the following assessment year, the same sum was credited to the partners' accounts, indicating a discrepancy in the assessee's claim.

The CIT (Appeals) upheld the penalty, emphasizing that the revised return was not voluntarily filed but in response to questioning by the Income-tax Officer. The department argued that the concealment of income was evident as the amount was later shown as the partners' capital. The assessee's representative contended that penalty should have been levied in the earlier assessment year if concealment had occurred then, citing relevant case laws.

The tribunal concluded that the assessee's actions were aimed at avoiding penal liability by falsely claiming the additional income in the revised return. The tribunal rejected the argument that penalty should have been imposed in the earlier year, highlighting the applicability of Explanation 2 in this case. The tribunal found the assessee's plea of limitation unsubstantiated, as the penalty proceedings were initiated before the date claimed by the assessee.

In light of the above analysis, the tribunal confirmed the order of the CIT (Appeals) and dismissed the appeal, upholding the penalty for concealment of income by the assessee.