Commissioner of Income Tax vs Shaikh Hasssan Hotels

The only point urged on behalf of the revenue by Mr. Rivonkar is that the ITAT has wrongly deleted the penalty imposed by the Assessing Officer. According to the learned Counsel, it was incumbent on the ITAT to maintain the penalty in view of Section 271 of the Income Tax Act, the relevant portion of which reads as follows:

Explanation 1.--Where in respect of any facts material to the computation of the total income of any person under this Act,--

(a) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) or the Commissioner to be false, or

(b) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed.

From the facts, it is clear that the penalty was imposed on the assessees because they were charged with concealment of income. However, the ITAT found that there was no concealment of income within the meaning of the Act, since the assessees had disclosed all the details in the returns filed prior to receipt of notice u/s 148 of the Act. The returns, appear to have been filed late and the delay has been admittedly condoned by the Assessing Officer. Admittedly, the assessees have also filed the balance sheet in which the discrepancies appear. The learned Counsel referred to Explanation 1 to Section 271 reproduced above and submitted that the ITAT should have held that the assessees failed to prove that the explanation is bona fide and all facts relating to the some material have been disclosed by them. We are unable to accept this contention in the facts of the present case.

The ITAT was justified in coming to the conclusion that there is no deliberate concealment. Indeed, it was not possible to arrive at the finding that the assessees deliberately concealed the income even though they had disclosed the material relevant to the computation of their income.

In these circumstances, it is clear that the assessees have proved that all the facts relating to and material to the computation of the total income have been disclosed by him. It, therefore, cannot be said that the facts have not been disclosed by them solely because those facts have been disclosed in the returns filed late, and the delay in respect of which has been condoned.

There is no merit in these appeals, which are hereby dismissed.