1990 (3) TMI 133 - AT - Income Tax

Summary

Issues Involved:
1. Imposition of penalty under Section 271(1)(c) for concealment of income.
2. Validity of the revised return filed by the assessee.
3. Assessment of unaccounted pronotes and their impact on the penalty.

Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c) for Concealment of Income:

The primary issue in this case is the imposition of a penalty of Rs. 13,860 on the assessee for alleged concealment of income under Section 271(1)(c). The Income Tax Officer (ITO) initiated the penalty proceedings after a raid conducted by the Intelligence Wing of the IT Department on 17th Jan., 1981, which led to the seizure of unaccounted pronotes from the assessee's business premises. The ITO found that the assessee had concealed income amounting to Rs. 21,000, which was not disclosed in the original return filed on 28th Aug., 1980. The ITO noted that the revised return filed by the assessee, admitting the additional income, was not voluntary but was a result of the raid and seizure. The ITO rejected the assessee's contention that the revised return was filed to purchase peace with the Department and imposed the penalty for concealment of income.

2. Validity of the Revised Return Filed by the Assessee:

The assessee argued that the revised return filed on 21st Feb., 1983, admitting an additional income of Rs. 21,000, was voluntary and aimed at settling the tax dispute. The assessee contended that the revised return was filed after verifying the books of accounts and discovering unexplained credits. However, the ITO and the Appellate Assistant Commissioner (AAC) concluded that the revised return was not voluntary but was filed under compulsion due to the seizure of pronotes during the raid. The Tribunal upheld this view, stating that the revised return could not be considered voluntary as it was filed after the Department had cornered the assessee with the seized pronotes, leaving no escape route.

3. Assessment of Unaccounted Pronotes and Their Impact on the Penalty:

The ITO and the AAC found that the unaccounted pronotes seized during the raid were part of the assessee's business activities as financiers. The pronotes represented unaccounted advances and were not recorded in the assessee's books of accounts. The ITO concluded that the concealment of these pronotes amounted to an attempt to evade tax. The Tribunal agreed with this assessment, stating that the seized pronotes were not investments but part of the business assets, and their non-disclosure in the accounts amounted to concealment of income. The Tribunal also noted that the assessee did not provide any evidence to substantiate the claim that the seized pronotes were blank or did not belong to the assessee. The Tribunal upheld the penalty, citing various judicial precedents that supported the imposition of penalty for concealment of income, even if a revised return was filed before the Department completed its investigation.

Conclusion:

The Tribunal confirmed the imposition of a penalty of Rs. 13,860 on the assessee for concealment of income under Section 271(1)(c). The Tribunal found that the revised return filed by the assessee was not voluntary and was prompted by the seizure of unaccounted pronotes during the raid. The Tribunal also concluded that the unaccounted pronotes were part of the assessee's business activities and their non-disclosure amounted to concealment of income. The appeal of the assessee was dismissed, and the penalty was upheld.