R.K. Bhargawa vs Commissioner of Income Tax

On an application u/s 256(1) of the IT Act, 1961, Tribunal has referred the following questions for the opinion of this Court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the levy of penalty u/s 271(1)(c) of the IT Act, 1961 ?"

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in concluding that the assessment on the AOP had no effect on the levy of penalty ?"

The case of the assessee is that assessee was a partner in M/s Ranu Brothers (Contracts) alongwith Shri Rajaram and Shri Rahul Bhargava. He had income from property also. He declared share income form M/s Ranu Brothers (Contracts) at Rs. 35,028. The ITO held that the firm Ranu Brothers (Contracts), which had closed, is not a genuine firm and the income earned in the name of firm M/s Ranu Brothers (Contracts) is income of the assessee and included the entire income from that firm in the hands of the assessee, which amounted to Rs. 51,378. The total income of the assessee assessed in the asst. yr. 1969-70 was at Rs. 71,921. As assessee has concealed the income by not furnishing the correct income, the penalty u/s 271(1)(c) was initiated and penalty of Rs. 16,500 has been imposed.

In appeal the Dy. CTT (A) has confirmed the penalty,

In appeal before the Tribunal, the Tribunal also confirmed the penalty imposed by the AO. The Tribunal while following the order in the case of same assessee, for the asst. yrs. 1970-71 and 1971-72 confirmed the penalty imposed by the ITO and upheld by the Dy. CTT (A).

Heard learned counsel for the parties.

Mr. Garg, learned counsel for the assessee submits that though finally the firm was found not genuine, but he has disclosed the income, therefore, there should be no penalty u/s 271(1)(c) of the Act.

Mr. Singhi, learned counsel for the Department submits that as the firm was not found genuine and he has not furnished the particulars of income correctly, the decision regarding non-genuineness of the firm has become final. When the assessee has furnished the inaccurate particulars of the income, there is nothing wrong in the order of authorities below on the given facts and specially when the minimum penalty has been imposed in the year under consideration.

Considering these admitted facts, we find no infirmity in the order of the Tribunal.

In the result, we answer the questions in affirmative i.e. in favour of the Revenue and against the assessee.

Reference so made stands disposed of accordingly.