2003-VIL-335-MAD-DT

Equivalent Citation: [2005] 273 ITR 401, 192 CTR 164, 142 TAXMANN 556

MADRAS HIGH COURT

Date: 15.12.2003

COMMISSIONER OF INCOME-TAX

Vs

C. ANANTHAN CHETTIAR.

BENCH

Judge(s)  : R. JAYASIMHA BABU., S. R. SINGHARAVELU.

JUDGMENT

The judgment of the court was delivered by

R. Jayasimha Babu J.- The question referred for our consideration, at the instance of the Revenue is:

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that no penalty should be levied with reference to the concealed income seized in the form of jewellery and cash following the ratio of the Supreme Court in the case of Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705, even after the amendment to section 271 in 1964 and in 1975?"

The assessment year is 1986-87.

There was a search in the assessee's shop and residence on November 22,1985, at which time cash, jewellery and certain documents were seized. Thereafter, a revised return was filed by the assessee for this assessment year, which return was accepted and assessment made on the basis of that return.

The assessee in response to the notice seeking to impose penalty, took the stand that there was no concealment and it was only for the purpose of buying peace with the Department that the additional income was disclosed and the return filed. The Tribunal, relying on the decision of the Supreme Court in the case of Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705, held that no penalty was in the circumstances leviable.

Learned counsel for the Revenue submitted that the order of the Tribunal is not in accordance with law, as it has ignored the Explanation to section 271(1)(c) of the Act. Learned counsel also placed reliance on the decision in the case of K.P. Madhusudhanan v. CIT [2001] 251 ITR 99 (SC), where-in it was held that the law declared by the court in the case of Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) was no longer applicable by reason of the addition of the Explanation to section 271. That Explanation casts a burden on the assessee to show that the additional income that had not been disclosed was not due to fraud or neglect.

In this case, the assessee offered no explanation at all except to assert that he disclosed the income only to buy peace with the Department and what was disclosed, in fact, was additional income. The reason for not having disclosed the income earlier was not stated. In these circumstances, the Tribunal was in error in setting aside the penalty. The question is answered in favour of the Revenue and against the assessee, in the light of the later decision of the three-judge Bench of the Supreme Court in the case of K.P. Madhusudhanan v. CIT [2001] 251 ITR 99.

 

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