Commissioner of Income Tax and Another vs Mentha and Allied Products P. Ltd.

We have heard learned Counsel for the Income Tax Department as well as learned Counsel for the respondent.

A return was filed by the assessee without including therein cash compensatory support amounting to Rs. 65,61,640. The cash compensatory support is hereinafter referred to as the "CSS" for short. This non-inclusion was based upon a decision of a Special Bench of the Income Tax Appellate Tribunal, Delhi in the case of Gedore Tools India Private Limited v. IAC reported in [1988] 25 ITD 193. Subsequently, the Finance Act, 1990, vide its Section 28(iiib) brought about an amendment, with retrospective effect, that the cash assistance was taxable. In view of this amendment, the assessee voluntarily filed a revised return and included in the CCS therein.

The Assessing Officer levied penalty u/s 271(1)(c) of Rs. 37,89,350 holding that the non-inclusion of CCS in the original return amounted to "concealment".

The appellate authority set aside the penalty on the ground that, because the revised return was filed voluntarily and the earlier non-inclusion of CCS had a plausible cause, namely, the decision of the Special Bench, Income Tax Appellate Tribunal, Delhi therefore the act of the assessee could not be held to amount to "concealment". The order of the appellate authority has been upheld by the Tribunal.

The Revenue has challenged the Tribunal''s order in this appeal u/s 260A of the Income Tax Act, alleging that the following questions of law are involved.

(a) Whether, on the facts and in the circumstances of the case, the hon''ble Tribunal was legally justified in upholding the order of the Commissioner of Income Tax (Appeals) who cancelled the penalty of Rs. 37,89,350 levied u/s 271(1)(c)?

(b) Whether, on the facts and in the circumstances of the case, the hon''ble Tribunal was legally justified in holding that the assessee filed revised return sou motu while it was filed after issue of notice u/s 142(1) on January 30, 1991?

(c) Whether, on the facts and circumstances of the case, the hon''ble Tribunal was legally justified in not considering the ratio of the decision of the hon''ble Supreme Court of India reported in G. C. Agarwal v. CIT ?

Having regard to the facts mentioned above, we are of the opinion that the appeal has no merit and is accordingly dismissed.