1981 (8) TMI 173 - AT - Income Tax

Summary

Issues:
1. Levy of penalty under section 271(1)(c) for concealment of income or furnishing inaccurate particulars of income.
2. Addition of Rs. 58,167 being profit on sale of cotton not declared in the original return.
3. Addition of Rs. 25,000 as income from undisclosed sources.
4. Jurisdiction of the IAC to levy penalty after the amendment of section 274.

Analysis:

Issue 1: Levy of penalty under section 271(1)(c)
The Appellate Tribunal ITAT Pune considered the case where the assessee was aggrieved by the penalty of Rs. 84,000 imposed by the IAC, Nasik under section 271(1)(c). The penalty was initiated due to the concealment of income or furnishing inaccurate particulars of income. The assessee, a firm dealing in cotton, had initially declared income of Rs. 51,358, which was later revised to Rs. 1,11,271. The IAC levied the penalty in relation to two specific additions made by the ITO. The Tribunal analyzed the facts and concluded that the penalty could not be upheld as there was no evidence of wilful neglect or concealment of income on the part of the assessee. The Tribunal accepted the assessee's argument that the situation amounted to negligence at most, but not concealment of income.

Issue 2: Addition of Rs. 58,167
Regarding the addition of Rs. 58,167, which was the profit on the sale of cotton not declared in the original return, the IAC found that the assessee had wrongly shown certain cotton bales as part of its closing stock, which led to the revised return. The Tribunal noted that the assessee's explanation of not receiving advice from its commission agent was not credible, and there was a lack of evidence to support the claim. However, the Tribunal ultimately held that the situation amounted to negligence rather than wilful concealment of income.

Issue 3: Addition of Rs. 25,000
The IAC also levied a penalty in respect of an additional Rs. 25,000 withdrawn by a partner for a specific purpose. The Tribunal considered the preliminary objection raised by the assessee that the ITO had not initiated penalty proceedings for this specific item. The Tribunal agreed with the assessee's contention and held that the IAC did not have jurisdiction to levy a penalty for this particular item. Additionally, the Tribunal found that even on merits, the penalty could not be justified as there were differing views on the nature of the transaction.

Issue 4: Jurisdiction of the IAC
Lastly, the Tribunal addressed the jurisdiction of the IAC to levy a penalty after the amendment of section 274. The Tribunal examined various decisions and concluded that the IAC did not have the jurisdiction to levy a penalty after the amendment. Therefore, the impugned order of the IAC was deemed to be without jurisdiction and vacated.

In conclusion, the appeal was allowed by the Appellate Tribunal ITAT Pune based on the detailed analysis of the issues involved in the case.