Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: TDS :: VAT Audit :: VAT RATES :: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: cpt :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4%
From the Courts »
 Principal Commissioner Of Income Tax, Delhi-2 Vs. Best Infrastructure (India) Pvt. Ltd.
 Pr. Commissioner Of Income Tax-04 Vs. Il & Fs Energy Development Company Ltd
  GTC Industries Limited vs. ACIT (ITAT Mumbai) (Special Bench)
 Spectrum Coal & Power Ltd vs. ACIT (ITAT Mumbai)
  CIT vs. D. K. Garg (Delhi High Court)
 Pr CIT vs. Emirates Technologies Pvt Ltd (Delhi High Court)
  The Citizens Cooperative Society Ltd vs. ACIT (Supreme Court)
 K Raveendranathan Nair vs. CIT (Supreme Court)
 M/s Fiberfill Engineers Vs. Deputy Commissioner Of Income Tax
 Commissioner Of Income Tax, Del Vs. Mrs. Tara Sinha
 Unitech Wireless (Tamil Nadu) Pvt. Ltd. Vs. Principal Commissioner Of Income Tax, New Delhi & Ors.

Penalty: Concealment of income-Law applicable
July, 31st 2007

HC (Allahabad)
CIT vs Bhaiya Lal Shyam Behari
Citation 292 ITR 296 
Concealment of income - Law applicable
The provisions contained in Explanation I to s.271(1)(c) of the Income Tax Act 1961, which was inserted w.e.f. 01 April 1976, were applicable to the AY 1979-80.

Explanation I to s.271(1)(c) of the Income Tax Act 1961
Penalty: Concealment of income  - No plausible explanation offered
In case where the assessee either failed to offer plausible explanation or if offered an explanation was found to be false or which could not be substantiated, then the amount added to his income would be deemed to represent the income in respect of which particulars had been concealed. A penalty for concealment would accordingly be leviable on the assessee.

S.271(1)(c) of the Income Tax Act 1961

High Court of Allahabad

CIT vs Bhaiya Lal Shyam Behari

I. T. R. No. 37 of 1999

R.K. Agrawal and Bharati Sapru, JJ

15 March 2007

A.N. Mahajan for the Commissioner
Krishna Agrawal for the Assessee


The Income-tax Appellate Tribunal, Allahabad, has referred the following question of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), to this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the cancellation of penalty of Rs. 35,000 imposed under section 271(1)(c) of the Act considered along with Explanation 1 thereto inserted with effect from April 1, 1976 ?"

The reference relates to the assessment year 1979-80 in respect of the proceedings initiated for imposition of the penalty under section 271(1)(c) of the Act.

Briefly stated the facts giving rise to the present reference are as follows :

This is a case of a firm where certain deposits aggregating to Rs. 53,400 were found in the name of six persons in the books of account of the asses-see and these deposits were found to be unexplained and added to the income of the assessee. Besides, another addition of Rs. 19,700 was made on account of unexplained petty expenses. Aggrieved by this order, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals), Agra, who confirmed both the additions with direction that the addition on account of unexplained deposits should be made on the basis of peak credit after giving allowance to the debit entries in the account of the creditors and the addition on account of unexplained cash credit was sustained at Rs. 44,500.

In view of the above, the Assessing Officer took the view that there was a concealment of Rs. 64,200 on the part of the assessee for the purpose of section 271(1)(c) read with Explanation 1 and imposed a penalty of Rs. 35,000 under section 271(1)(c) of the Income-tax Act, 1961, on the assessee. The assessee filed appeal against the order passed under section 271(1)(c) before the learned Commissioner of Income-tax (Appeals), Agra, who deleted the said penalty of Rs. 35,000.

It was submitted before the Tribunal that the assessee was nowhere found guilty of fraud or gross or wilful neglect nor was the evidence produced found to be false, fabricated or fraudulent. Reliance was placed on a decision of the hon'ble Calcutta High Court in the case of CIT v. M. B. Engineering Works P. Ltd. reported in [1986] 158 ITR 509, where it was held that even the Explanation appended to section 271(1)(c) did not supersede the ratio of the decision of the hon'ble Supreme Court in the case of CIT v. Anwar All [1970] 76 ITR 696. It was submitted that penalty would not be imposed under the Explanation unless it was shown that the amounts in question were really the income of the assessee. The Tribunal observed that there was no finding of concealment in the penalty order. However, an extract from the penalty order has been given, where the Assessing Officer has held that "the assessee had no plausible explanation and also that the assessee had concealed the income . . . ". The Tribunal further observed that there was no contumacious conduct on the part of the assessee or any wilful neglect or fraud played by them. For these reasons, it was held that it was not a fit case for imposing the penalty and the departmental appeal was dismissed.

We have heard Sri A. N. Mahajan, learned standing counsel appearing for the Department for the Revenue, and Sri Srikrishna Agrawal appearing for the respondent-assessee.

In the statement of the case sent by the Tribunal, it has been specifically mentioned by the Tribunal that the amendment made in Explanation 1 inserted to section 271(1)(c) of the Act with effect from April 1, 1976, according to which, where the assessee either failed to offer any explanation or offered an explanation, which was found to be false or offered an explanation which he was not able to substantiate, then the amount added would be deemed to represent the income in respect of which particulars have been concealed. There was a proviso below the Explanation according to which clause (B) would apply in respect of any amount added as a result of rejection of any explanation offered by the assessee if the explanation was bona fide and all the facts relating to the same and material to the computation of his total income were disclosed, was not brought to the notice of the Tribunal at the time of hearing and therefore it was not applied.

The penalty proceedings in the present case relating to the assessment year 1979-80 in which Explanation 1 as inserted with effect from April 1, 1976, was applicable as the Tribunal has failed to consider the effect of the said Explanation 1 and as such the order of the Tribunal deleting the penalty cannot be sustained.

We, accordingly, answer the question referred to above in the negative that is in favour of the Revenue and against the assessee with further direction to decide the matter afresh after considering Explanation 1 to section 271(1)(c) inserted with effect from April 1, 1976.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Careers

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions