C.M. Shivamallappa vs Commissioner of Income Tax

Jagannatha Shetty, J.—The following question has been referred u/s 256(2) of the Income Tax, 1961, by the Income Tax Appellate

Tribunal, Bangalore Bench :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the levy of penalty was justified ?

The state briefly, the facts are these.

The assessee is a PWD Contractor at Gundlepet. For the assessment years in question, he filed returns of income, but after it was found that the

incomes declared were not accurate. That was made known only by the assessee. The assessments were, therefore, reopened u/s 147(a) of the

Act.

The reopened assessments were completed in accordance with law followed by penalty notice issued on the assessee stating that he had filed

returns concealing his true income and, therefore, action should be taken u/s 271(1)(c) of the Act. The assessee in reply stated that he submitted

the original returns on the basis of the certificates issued by the PWD and he himself later invited the attention of the Department to the discrepancy

in the actual and disclosed incomes and, therefore, there was no wanton concealment of his income necessitating the penalty proceedings u/s

271(1)(c). The Income Tax Officer did not agree with the plea put forward by the assessee and he levied the penalty. The Appellate Assistant

Commissioner confirmed the levy of penalty and so too the Tribunal.

In these references, Mr. Sarangan, learned counsel for the assessee, submitted that there was no intention at all on the part of the assessee to

conceal any part of his income, since he himself voluntarily disclosed the true income before proceedings were initiated u/s 148 of the Act.

We have perused the material papers. The voluntary disclosure of the real income by the assessee has been referred to in the penalty order

made by the Income Tax Officer. The Tribunal unfortunately has not at all looked into it. Since the assessee himself has disclosed the receipts

which became the basis for reopening the assessment, there was no concealment of income calling for the levy of penalty.

In the result, we answer the question in the negative and in favour of the assessee.