T ASHOK PAI Vs. ASSISTANT COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
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S. Bandyopadhyay, Accountant Member -
(1.) THE assessee before us is an individual who is an engineering graduate and had income by way of salary, shares of profit from a number of firms besides proprietorship income from an individual business and also dividend and interest. THE order appealed against is the appellate order passed by the CIT(A) in which she upheld the imposition of penalty of Rs. 5,70,000 levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961. THE facts of the case are as below.
(2.) For assessment year 1985-86, the assessee originally filed a return on 30-3-1988 claiming a loss of Rs. 2,41,647. From the wealth-tax return of the assessee for the same year, also filed on 30-3-1988, it was noticed that the assessee must have sold away large number of equity shares of Reliance Textiles Ltd. In the wealth-tax return, a deposit of Rs. 3 lakhs with M/s. Manipal Printers & Publishers was also not shown. Various omissions in the income-tax return by way of not depicting the capital gains on sale of Reliance shares and showing of the income of Rs. 1,07,119 in the proprietary concern of the assessee as loss were found. The assessment, which had originally been completed on 19-12-1990 by virtually accepting the return filed by the assessee, was reopened under Section 147(a) by issue of a notice under Section 148 on 8-12-1989. The assessee filed another return in response to this notice on 12-1-1990, this time claiming the loss of Rs. 1,04,531. However, this return also continued not to disclose the capital gains and some of the other items of income as in the original return. Around the same time, the assessee filed a petition before the Settlement Commission, which was rejected by the Additional Bench of the Settlement Commission, Madras by its order dated 26-9-1990 as unsuitable for admission inasmuch as no complexities of issues were involved in that case.
2.1 Thereafter, the assessee filed a further revised return on 23-11-1990 admitting total income of Rs. 4,92,880. The Assessing Officer found out that there were gross variations in respect of several items of income in the returns filed on the first occasion and the last revised return, the details of which are being shown below :
Penalty proceedings were initiated by the AO for concealment of income and also for furnishing of inaccurate particulars of income by the assessee. The assessee, at the time of filing of the second revised return itself, submitted an explanation regarding wide variation between original return and the revised return. The explanation furnished by the assessee was that mistakes had crept in the original return on account of negligence of Syndicate Bank, holding General Power of Attorney on behalf of the assessee in respect of all his transactions including even the responsibilities relating to filing of income-tax and wealth-tax returns as well as representing his income-tax and wealth-tax matters before the concerned authorities. It was stated that the income-tax return had been prepared by the Syndicate Bank and sent for the assessee's signature, which was signed by the assessee under the bona fide belief that the entire income/loss had been considered by the Syndicate Bank while preparing the return. The assessee also repeated his argument at the stage of the penalty proceedings. All these arguments put forward by the assessee before the AO at different stages and later on before the CIT(A) have been repeated before us also and we will come to consider those arguments at appropriate time.
(3.) THE AO did not accept the abovementioned explanations of the assessee. THE AO was of the view that the accusation made by the assessee about the negligence and inadvertence on the part of his authorised agents is a matter to be settled between the assessee and the said agents and that this does not absolve the assessee of his responsibility to furnish his income and wealth correctly as required under the Law. THE AO harped on the point that when the assessee had signed the verification in the return, it does not lie in his mouth to plead that being an engineer, he is not conversant with the taxation and financial laws. THE AO states that the assessee has been an income-tax and wealth-tax payee for a number of years and, therefore, it is his duty before signing the verification to make sure that correct income has been disclosed. THE AO enumerated the different items of omission/mis-statement in the original return filed by the assessee. He stated that the assessee had not disclosed in the return, capital gains amounting to Rs. 6,44,514and that the profit of Rs. 1,07,119 made in his proprietary business M/s. Associated Trading Co., had been shown as loss of the corresponding amount in the return. THE AO furthermore states that the assessee did not disclose interest amount of Rs. 45,000 from M/s. Manipal Printers & Publishers Pvt. Ltd., in the original return. THE AO thus came to the conclusion that all these facts show gross negligence and inadvertence on the part of the assessee attracting thereby the penal provisions under Section 271(1)(c).;
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