COMMNER OF INCOME TAX VIZAG V. M/S JANATA TEXTILES

ITTA/53/2000

AI Insights

The case revolves around an appeal by the Commissioner of Income Tax, Visakhapatnam against M/s. Janata Textiles concerning a penalty for alleged concealment of income under Section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer had initially imposed a penalty of Rs.6,36,301 for alleged concealment of income, which was upheld by the Commissioner but later deleted by the Income Tax Appellate Tribunal. The Tribunal found no grounds for concealment as the assessee had disclosed all relevant facts, even though the Assessing Officer doubted the genuineness of some creditors. The High Court, upon reviewing the Tribunal's decision, concurred with the Tribunal's findings and dismissed the appeal, emphasizing that mere disbelief or dissatisfaction with the disclosed facts does not constitute concealment.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 681340 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 21-06-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Concealment of income; Creditors; Demand drafts; Fictitious liabilities; Onus of proof; Penalty
• Section: 271(1)(c)

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD FRIDAY, THE TWENTY FIRST DAY OF JUNE TWO THOUSAND AND THIRTEEN PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SEN GUPTA AND THE HON'BLE MS. JUSTICE G.ROHINI I.T.T.A. No. 53 OF 2000 Between: Commissioner of Income Tax, Visakhapatnam ..... Appellant AND M/s. Janata Textiles, Park West Road, Vizianagaram .....Respondent The Court made the following : JUDGMENT: (per the Hon’ble the Chief Justice Sri K.J. Sengupta) This appeal has been filed against the judgment and order of the learned Income Tax Appellate Tribunal, Hyderabad Bench dated 17.2.2000 on the following substantial questions of law: a. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in deleting penalty levied under Sec.271(1)(c)? b. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding that the onus of proof in establishing fictitious liabilities lies on the department and the same was not discharged by it? c. Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in deleting the penalty merely because that the assessee pleaded that it paid the amounts by way of demand drafts to the creditors during the subsequent years even without there being any evidence adduced by the assessee. d. Whether the Appellate Tribunal is justified in accepting the plea of the assessee even without there being any material bought on record by the assessee for establishing the factual existence of the creditors and receipt of demand draft by them on record? e. Whether the findings recorded by the Appellate Tribunal are based on any material on record? The Assessing Officer imposed penalty of Rs.6,36,301/- on the alleged concealment of income under Sec. 271(1)(c) of the Income Tax Act, 1961 and an appeal has been preferred before the Commissioner. The assessee was unsuccessful to get the amount of penalty deleted. The learned Tribunal on appeal being preferred, allowed deletion of penalty. Learned counsel for the appellant contends that the learned Tribunal was not right in deleting penalty amount levied under Sec.271(1)(c). He contends the there was clear concealment of income and this would be apparent from the records of the Assessing Officer as well as the Commissioner of Income Tax and in view of the said finding of concealment, the penalty amount is justified. Learned counsel for the respondent submits that when the Tribunal has reached the fact-finding that there is no concealment, this court cannot substitute its own finding. On hearing the learned counsel for the parties and after going through the impugned order, we consider, what the learned counsel for the respondent says is correct. The learned Tribunal, on facts, reached the conclusion as follows: “… In view of the above facts and circumstances of the case, we find that there cannot be any ground of concealment and consequent levy of penalty mainly on the ground that the addition made in the assessment was confirmed by the Income Tax Appellate Tribunal. When the genuineness of those creditors was doubted by the Assessing Officer, the assessee might not have been successful in explaining the position to the complete satisfaction of the Assessing Officer. These are the matters of difference of opinion or at the maximum the attitude of appreciation of evidence on record. But for this, we do not find any case of concealment in this case. Therefore, it is our considered opinion that the levy of penalty on the alleged concealment of income to the extent of Rs.9,13,998/- is uncalled for in this case….” According to us, concealment amounts to total suppression of facts, which is not brought to the attention of any Income Tax Authority. But, if the facts are placed and those facts are not correct facts, such incorrect facts cannot be said to be concealment. Belief or disbelief cannot be the foundation of concealment. When the facts are placed, there cannot be any concealment. In this case, that’s what has happened exactly. Whatever explanation of facts was placed before the Assessing Officer, might not have been accepted or believed but that cannot be said to be concealment. The imposition of penalty under Sec. 271(1)(c) of the Income Tax Act can be made only when the precondition of being concealment of the income is satisfied. When the precondition is not satisfied, the imposition of penalty is not sustainable. We, thus, conclude that the learned Tribunal has reached correct finding and we do not find any reason to interfere with the same. Accordingly, the appeal is dismissed. No order as to costs. _______________________ Kalyan Jyoti Sengupta, CJ. __________ G.Rohini, J. June 21, 2013 MAS "