Case Note & Summary
The case pertains to an Income Tax Reference under Section 256(1) of the Income Tax Act, 1961, arising from proceedings for the Assessment Year 1987-88. The assessee, M/s. Maharaj Garage & Company, had filed a return of income on 1-10-1987 declaring total income of Rs.1,12,380/-. The assessment under Section 143(3) read with Section 147(a) was completed on 30-3-1988, wherein it was found that the assessee had declared net profit of Rs.1,90,808.38 against the actual net profit of Rs.11,02,329.38, leading to suppression of income of Rs.9,11,521/-. Consequently, the Income Tax Officer issued a notice on 30-9-1988 proposing to impose penalty under Section 271(1)(c) for concealment of particulars of income and furnishing inaccurate particulars. The assessee filed a reply on 17-2-1989 denying the allegations. However, the Income Tax Officer, after considering the facts and circumstances, held that it was a fit case for levy of penalty and imposed the minimum penalty of Rs.4,60,000/- (equivalent to the tax sought to be evaded) after obtaining prior approval of the Deputy Commissioner of Income Tax. The assessee appealed to the Commissioner of Income Tax (Appeals), who confirmed the penalty. The assessee then appealed to the Income Tax Appellate Tribunal, which also upheld the penalty. Aggrieved, the assessee filed a reference to the High Court. The High Court, after hearing both sides, found that the findings of concealment and furnishing inaccurate particulars were based on material on record and that the penalty was rightly imposed. The Court answered the question of law in the affirmative, i.e., in favor of the Revenue and against the assessee, and dismissed the reference.
Headnote
A) Income Tax - Penalty for Concealment - Section 271(1)(c) of the Income Tax Act, 1961 - The assessee had declared net profit of Rs.1,90,808.38 against actual net profit of Rs.11,02,329.38, resulting in suppression of income of Rs.9,11,521/-. The Income Tax Officer imposed minimum penalty of Rs.4,60,000/- after obtaining prior approval of Deputy Commissioner. The Tribunal upheld the penalty. Held that the findings of concealment and furnishing inaccurate particulars were based on material on record and the penalty was rightly imposed (Paras 1-3).
Issue of Consideration
Whether the Income Tax Appellate Tribunal was correct in law in upholding the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 for concealment of income and furnishing inaccurate particulars.
Final Decision
The High Court answered the question of law in the affirmative, i.e., in favor of the Revenue and against the assessee, and dismissed the Income Tax Reference.
Law Points
- Penalty under Section 271(1)(c) of the Income Tax Act
- 1961 is leviable for concealment of particulars of income or furnishing inaccurate particulars
- minimum penalty equivalent to tax sought to be evaded is imposable
- prior approval of Deputy Commissioner required for imposition of penalty
Case Details
2017 LawText (BOM) (08) 206
Income Tax Reference No.21 of 2008
R.K. Deshpande, Manish Pitale
Shri K.P. Dewani for Applicant, Shri S.N. Bhattad for Respondent
M/s. Maharaj Garage & Company
The Commissioner of Income Tax, Vidarbha, Nagpur (Now Commissioner of Income Tax-II, Nagpur)
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Nature of Litigation
Income Tax Reference under Section 256(1) of the Income Tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal upholding penalty under Section 271(1)(c).
Remedy Sought
The assessee sought to have the question of law answered in its favor and the penalty set aside.
Filing Reason
The assessee was aggrieved by the order of the Income Tax Appellate Tribunal confirming the penalty imposed under Section 271(1)(c) for concealment of income and furnishing inaccurate particulars.
Previous Decisions
The Income Tax Officer imposed penalty of Rs.4,60,000/- on 3-3-1989; the Commissioner of Income Tax (Appeals) confirmed the penalty; the Income Tax Appellate Tribunal upheld the penalty.
Issues
Whether the Tribunal was correct in law in upholding the penalty under Section 271(1)(c) of the Income Tax Act, 1961 for concealment of income and furnishing inaccurate particulars.
Submissions/Arguments
The assessee argued that there was no evidence to hold concealment or furnishing of inaccurate particulars.
The Revenue contended that the findings were based on material on record and the penalty was rightly imposed.
Ratio Decidendi
The findings of concealment of particulars of income and furnishing inaccurate particulars recorded in the assessment order under Section 143(3) read with Section 147(a) were based on material on record, and the minimum penalty under Section 271(1)(c) was rightly imposed after obtaining prior approval of the Deputy Commissioner.
Judgment Excerpts
The proceedings under Section 143(3) read with Section 147(a) of the Income Tax Act, 1961 for the Assessment Year 1987-88, completed on 30-3-1988, declaring the total income of Rs.1,12,380/- on 1-10-1987, were reopened by the Department of Income Tax.
In the order dated 30-9-1988 passed in such proceedings, two crucial findings were recorded (i) that the assessee has concealed the particulars of his income for the Assessment Year 1987-88; and (ii) that he has furnished the inaccurate particulars of such income.
The Income Tax Officer, considering the facts and circumstances of the case, held that this is a fit case of levy of penalty under Section 271(1)(c) of the Income Tax Act for the act of concealing particulars of income by the assessee by furnishing inaccurate particulars of income in the return filed on 1-10-1987.
Procedural History
Assessment under Section 143(3) read with Section 147(a) completed on 30-3-1988; notice for penalty issued on 30-9-1988; assessee replied on 17-2-1989; penalty order passed on 3-3-1989; appeal to CIT(A) dismissed; appeal to ITAT dismissed; reference to High Court under Section 256(1) filed; High Court dismissed reference on 22-8-2017.
Acts & Sections
- Income Tax Act, 1961: 143(3), 147(a), 271, 271(1)(c), 256(1)
