Manohar Jewellery vs Asstt. Commissioner of Income Tax and Another

C.N. Ramachandran Nair, J.—This appeal is filed against the order of the Tribunal confirming the penalty levied u/s 271(1)(c) of the Income Tax Act. The assessee, a dealer in gold and silver jewellery, was searched by the department on 13-1-1988. In the course of search, the assessee admitted the unaccounted income of Rs. 8,60,400 being the value of gold and other articles in the possession of the assessee which were not accounted in the books of accounts. Even though the assessee made a declaration of income u/s 132(4) of the Act in the course of search, while filing the return later, the assessee took the stand that the said income is exempted from tax. In other words, return was not filed disclosing the income and tax was also not paid by him as required under Explanation 5 to Section 271(1)(c) of the Act, to avoid penalty. Even though the first appellate authority cancelled the penalty order, based on a letter issued by the assessee offering to pay cash for cancelling the penalty, the Tribunal restored it, against which this appeal is filed.

On going through the order of the Tribunal, we find that the assessee invited penalty by back tracking from their own admission made in the course of search and the assessee in fact did not even file the return voluntarily disclosing the income or remitted the tax. Concealment of income is proved and if the assessee wanted to avoid penalty, they should have complied with the conditions contained in Explanation 5 to Section 271(1)(c) of the Act. We do not find anything wrong in the Tribunal sustaining the penalty for failure of the assessee to discharge the burden conferred on it under Explanation 5 to Section 271(1)(c) of the Act.

We, therefore, dismiss the appeal as devoid of any merit.