1997 (6) TMI 40 - AT - Income Tax

Summary

Issues:
- Assessment of penalties under section 271(1)(c) for the assessment years 1977-78 and 1978-79.
- Inclusion of share income of minor sons in the total income of the assessee.
- Applicability of section 64 of the Act.
- Interpretation of Form of Return after 1972 amendment.
- Consideration of penalty under section 271(1)(c) for failure to include share income of minor sons.

Analysis:

The judgment by the Appellate Tribunal ITAT Bangalore pertains to the assessment of penalties under section 271(1)(c) for the assessment years 1977-78 and 1978-79. The case involves the inclusion of the share income of minor sons in the total income of the assessee and the applicability of section 64 of the Income Tax Act. Initially, the CIT(Appeals) had canceled the penalties levied under section 271(1)(c) for both years under appeal, citing that there was no statutory obligation for the assessee to include such income in his total income. However, the Tribunal found that the assessee is liable to include the share income of his minor sons from the firm as forming part of his total income, based on the provisions of section 64(1)(iii) of the Act.

Regarding the interpretation of the Form of Return after the 1972 amendment, the Tribunal highlighted that the Form of Return required the income arising to the spouse or minor child to be shown as forming part of the total income for assessment purposes. As the assessee had failed to include the share income of his three minor sons from the firm in his total income, the Tribunal concluded that the assessee was guilty of concealing income and that the provisions of section 271(1)(c) were applicable in this case. Therefore, the Tribunal reversed the order of the CIT(Appeals) and restored that of the Income Tax Officer for the two years under consideration.

The Tribunal referenced a previous Supreme Court judgment to support its decision, emphasizing that the failure to disclose the share income of minor family members in the return constitutes concealment of income. The Tribunal's analysis focused on the legal obligations imposed by the Income Tax Act and the Form of Return, ultimately leading to the conclusion that the penalties under section 271(1)(c) were justified in this case. Consequently, the appeals of the revenue were allowed, and the penalties were upheld for the assessment years in question.