Penalty imposed on concealed income cannot be revoked

Penalty imposed on concealed income cannot be revoked

Words once uttered cannot be taken back. Similarly, income once concealed cannot be disclosed (by rectification) to if scrutiny is initiated.  

Books of account and documents etc, seized during search from the residence of partners of the assessee unearthed substantial undisclosed income. Consequently, the assessee filed revised returns for the years 1982-83 to 1986-87 and offered to disclose additional income.

However, before rectification notices under section 148 were served upon the assessee for all these assessment years and penalty was levied on the assessee.

The assessee appealed in this regard claiming to disclose all the concealed income pertaining to the assessment years under scrutiny. The commissioner of appeals  rejected the claim saying the assessee offered to disclose the concealed income on being cornered, and compelled to pay penalty.

Whether since assessee offered said undisclosed on being cornered by department, it was a deliberate act of concealment of income by furnishing inaccurate particulars in its returns for all assessment years. It spoke volumes of contrivance by assessee with apparent element of intention to conceal income.

However the Tribunal had waived the penalty.

On second appeal to the High court of Punjab and Haryana, the waiver was canceled and penalty levied again  on the assessee.
Held for the following reasons:

  • It was not an innocuous omission on the part of the assessee but was a deliberate act of concealment of income by furnishing inaccurate particulars in its returns for the assessment years 1982-83 to 1986-87. Had it been a case of single year, plea of the assessee that it was merely an omission and there was no mens rea, could possibly be considered.
  • Furnishing of inaccurate particulars was clearly with a view to conceal income consecutively for five assessment years. It speaks volumes of contrivance by the assessee with apparent element of mens rea.
  • Looking the matter from another angle, the assessee itself had filed revised returns giving fresh particulars of its income but it was only when the assessee was cornered consequent upon search and seizure proceedings and had received disturbing information of initiation of proceedings under section 148 being contemplated against it. Thus, by no means, was it a voluntary exercise of furnishing of fresh particulars by way of revised returns for all these years.

Thus, on these facts and circumstances projected by Commissioner (Appeals), there remains no doubt that it was not only a case of furnishing of inaccurate particulars in earlier assessments but is also a case of concealment of income which thus had escaped assessment.

  • Considerations for adjudication of an application/petition under section 273 for waiver of penalty and interest are that stand of the assessee should be of voluntary disclosure in good faith and that co-operation was extended by it to the income-tax authorities and further that the tax due on the basis of returned income had already been paid and it was case of genuine hardship. However, in the present case, these facts are lacking.
  • It is further held that the Tribunal was wrong in cancelling the penalty imposed on the assessee. Hence, penalty imposed on concealed income cannot be revoked.


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