The Supreme Court has ruled that the revenue department cannot initiate penalty proceedings if there is absence of motive on part of an assessee to conceal the actual income.

There are differences between concealment of income and furnishing of inaccurate particulars, the apex court said, setting aside an order of an assessing officer of income tax.

The income tax department had initiated penalty proceedings against the appellant after he filed a revised return furnishing his detailed investments.

A bench comprising Justicde S B Sinha and Justice Markandey Katju said, the order imposing penalty is quasi-criminal in nature and, thus, burden lies on the department to establish that the assessee had concealed his income. Since burden of proof in penalty proceedings varies from that in the assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted, though a finding in the assessment proceeding constitute good evidence in the penalty proceeding. In the penalty proceedings, thus, the authorities must consider the matter afresh as the question has to be considered from a different angle.

The court said that the concealment of income and furnishing of inaccurate particulars carry different connotations. Concealment refers to deliberate act on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppressio veri or suggestio falsi.

The apex court allowed an appeal by the assessee. The income tax department which was not satisfied had asked for detailed particulars of investments and a revised return furnishing all the requisite particulars to the department. The assessee had also filed an application before the Settlement Commission for settlement of the taxes due which was, however, rejected .

The assessee thereafter, filed a second revised return, upon which assessment was made by the assessing officer. Though the revised return was accepted by the assessing officer, a proceedings for imposition of penalty in terms of Section 271(1)(C) of the income tax act was started.