P. RAJASWAMY vs. THE COMMISSIONER OF INCOMETAX, TVM.

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ITA/189/2002HC KeralaKLHC01021012200225 February 2008Author: HONOURABLE MR.JUSTICE T.R.RAMACHANDRAN NAIR,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the penalty levied under Section 271(1)(c) of the Income Tax Act for the assessment year 1983-84 was sustainable. The court reasoned that for a disclosure to be considered voluntary and to avoid penalty, it must be made before the detection of concealed income by the department. In this case, the assessee conceded the income of Rs. 96,200 only after the department detected the deposit. Therefore, the assessee could not avoid the penalty. The court also noted that the penalty levied was the minimum payable under Section 271(1)(c). Consequently, the High Court found no grounds to interfere with the Tribunal's order. The appeal was dismissed.

What were the facts?

The assessee, P. Rajaswamy, proprietor of M/s. Raja Jewellery, filed an appeal under Section 260A of the Income Tax Act against an order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench. The appeal concerned the assessment year 1983-84 and challenged the penalty levied under Section 271(1)(c) of the Act. The assessee had filed three returns for the assessment year. The first return declared an income of Rs. 17,563. Following a search, a second return was filed declaring an income of Rs. 96,200. Subsequently, a third return was filed on April 18, 1989, declaring a further income of Rs. 1,12,640. All authorities, including the Tribunal, found that the assessee did not voluntarily disclose the Rs. 96,200 deposit in Syndicate Bank; this disclosure was made after the department detected it.

What were the issues?

1. Whether the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 1983-84 is sustainable, considering the assessee's disclosure of income after detection by the department. Assessee's Contention: The assessee's counsel argued that the disclosure of the Rs. 96,200 amount was made under the Amnesty Scheme. However, the judgment indicates this disclosure was made after a search and detection by the department. Revenue's Contention: The revenue contended that the disclosure was not voluntary and was made only after the department detected the concealed income, thus attracting penalty.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 25TH FEBRUARY 2008 / 6TH PHALGUNA 1929 ITA.No. 189 of 2002() --------------------- AGAINST THE ORDERS IN ITA.101/1995 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/ASSESSEE ----------------------------------- P.RAJASWAMY,M/S.RAJA JEWELLERY, CHALAI,THIRUVANANTHAPURAM BY ADV. SRI.C.KOCHUNNY NAIR SRI.DALE P.KURIEN RESPONDENTS: RESPONDENT/REVENUE ------------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM BY SC SRI. P.K. R. NAIR (SR.) & SRI. GEORGE K GEORGE THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 25/02/2008 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & T.R. RAMACHANDRAN NAIR, JJ. -------------------------------------------- I.T.A. No. 189 OF 2002 -------------------------------------------- Dated this the 25th day of February, 2008

JUDGMENT C.N. Ramachandran Nair,J. This appeal is filed under Section 260A of the Income Tax Act against the order of the Tribunal confirming penalty levied under Section 271(1)(c) of the Act for the assessment year 1983-84. We heard counsel appearing for the appellant and senior standing counsel appearing for the respondent. On going through the Tribunal's order we find that appellant filed as many as three returns for the assessment year 1983-84. While in the first return appellant returned an income of Rs.17,563/-, in the second return filed after search the assessee returned an income of Rs. 96,200/-. Thereafter assessee filed another return on 18.4.1989 declaring a further income of Rs. 1,12, 640/-. All the authorities below including the Tribunal found that assessee did not voluntarily disclose the amount of Rs. 96,200/- which remained in deposit in the assessee's name in Syndicate Bank. Even though counsel

2 for the assessee submitted that assessee disclosed this amount under the Amnesty Scheme, it is seen that such disclosure was after search and detection of deposit by the department. The declaration for the purpose of avoiding penalty should be voluntary and before detection of the concealed income by the department. Since in this case assessee conceded income after the department detected the same, assessee cannot avoid penalty. It is seen that the amount of penalty levied is minimum payable under Section 271(1)(c) of the Act. We therefore find no ground to interfere with the Tribunal's order. We therefore dismiss the appeal. (C.N.RAMACHANDRAN NAIR) Judge. (T.R.RAMACHANDRAN NAIR) Judge. kk

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