1990 (12) TMI 143 - AT - Income Tax

Summary

Issues:
1. Confirmation of penalty under section 271(1)(c) of the Income-tax Act, 1961 for assessment year 1981-82.
2. Discrepancy in the explanation provided by the assessee regarding the source of income from the sale of jewellery.
3. Application of Explanation 1 to section 271(1) for determining concealed income.

Detailed Analysis:
1. The judgment revolves around the confirmation of a penalty of Rs. 12,500 imposed on the assessee under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1981-82. The penalty was initially imposed by the Income-tax Officer and later confirmed by the Commissioner of Income-tax (Appeals) and the Tribunal. The penalty was related to the treatment of long-term capital gains from the sale of jewellery, which the assessing officer deemed as income from undisclosed sources. The assessee's explanation regarding the source of income was under scrutiny throughout the proceedings.

2. The crux of the issue lies in the inconsistency in the assessee's explanation regarding the source of income generated from the sale of jewellery. Initially, the assessee claimed that the jewellery was purchased and sold in the same year, supported by a purchase voucher. However, the assessing officer, Commissioner of Income-tax (Appeals), and the Tribunal did not find this explanation credible. The Tribunal noted that the original purchase voucher was not submitted, and the assessee later changed the stance, claiming that the amount in question represented jewellery purchased in 1973. This inconsistency in explanations and lack of supporting evidence led to the confirmation of the penalty.

3. The application of Explanation 1 to section 271(1) played a crucial role in determining the concealed income in this case. Explanation 1 stipulates that if a person fails to offer a credible explanation or provides a false explanation regarding material facts related to income computation, the concealed amount will be deemed as income. In this case, the Tribunal found that the changing stands taken by the assessee, coupled with the lack of substantiating evidence, rendered the explanation not bona fide. As a result, the penalty of Rs. 12,500 was upheld based on the provisions of Explanation 1 and the overall circumstances of the case.

In conclusion, the judgment upheld the penalty imposed on the assessee under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1981-82 due to discrepancies in the explanation provided regarding the source of income from the sale of jewellery. The application of Explanation 1 to section 271(1) played a significant role in deeming the concealed amount as income, considering the changing stands and lack of supporting evidence from the assessee.