1976 (7) TMI 95 - AT - Income Tax

Summary

Issues:
Levy of penalty under section 271(1)(c) for concealment of income and furnishing inaccurate particulars.

Detailed Analysis:

1. Imposition of Penalty:
The Income-tax Officer initiated penalty proceedings under section 271(1)(c) and concluded that the assessee had concealed income and furnished inaccurate particulars, resulting in a penalty of Rs. 16,817. The reassessment added an amount to the income returned, representing a balance due to weavers from whom the assessee had purchased sarees on credit. The Tribunal and the Appellate Assistant Commissioner confirmed the levy of penalty.

2. Assessee's Arguments:
The authorized representative of the assessee referred to a previous Tribunal order and argued that the imposition of penalty based on the addition made in the assessment was unjustified. The representative contended that the Tribunal's finding on credit purchases did not establish concealment of income.

3. Department's Position:
The departmental representative argued that as the Tribunal had accepted that the purchases were not on credit but involved cash purchases with a deficit cash balance, the onus was on the assessee to prove that there was no failure to report the correct income.

4. Tribunal's Decision:
After considering the submissions and evidence, the Tribunal found that there was no clear finding of concealment of income. The Tribunal observed that the evidence indicated credit purchases, and the addition was sustained due to lack of proper evidence. The Tribunal concluded that the assessee had proven that there was no gross neglect or fraud in reporting the purchases as credit-based, supported by the evidence of Subbaraya Pandaram.

5. Conclusion and Cancellation of Penalty:
The Tribunal agreed with the assessee's representative that there was no gross neglect or fraud in the reporting of income. Since there was no clear finding of concealment or inaccurate particulars, the Tribunal canceled the penalty, noting the absence of contumacious conduct or concealment of income by the assessee.

6. Outcome:
The Tribunal allowed the appeal, canceling the penalty imposed under section 271(1)(c) for concealment of income and inaccurate particulars.