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Download: sangameshwara_penalty_148_ROI.pdf


Despite offer of income in s. 148 ROI, s. 271(1)(c) penalty leviable

The assessee filed a ROI offering Rs. 4.68 lakhs which was assessed. Subsequently, the AO issued a s. 148 notice claiming that cash credits of Rs. 4.50 lakhs had to be assessed. The assessed filed a ROI pursuant to the s. 148 notice in which it offered the said cash credits as income and the assessment was finalized on that basis. In the s. 271(1)(c) penalty proceedings, the assessee claimed that it was not liable for penalty on the ground that (i) the income offered in the ROI was accepted without any addition and so there was no concealment as per the ROI; (ii) the cash credits were offered as income to buy peace & (iii) that the AO had not recorded satisfaction that the assessee had concealed the income. The CIT (A) & Tribunal accepted the assessee’s claim. On appeal by the department to the High Court, HELD reversing the lower authorities:

The ROI filed pursuant to a s. 148 notice is not ‘voluntary’ & it can be readily inferred that the assessee had not furnished full particulars of his true income and so reopening became necessary. The explanation that the income was offered to buy peace is not acceptable because it is a clear case of admission of not offering true income earlier. If it had not been for the reopening, the income would have escaped assessment. When the assessee admits, by offering additional income in the s. 148 ROI, that the earlier ROI did not disclose the true income, there is no burden on the department to show concealment.

Contrast with Suresh Chandra Mittal 241 ITR 124 (MP) affirmed in 251 ITR 9 (SC) & CIT vs. Rajiv Garg 313 ITR 256 (P&H) & SAS Pharmaceuticals 335 ITR 176 (Del)

One Response to “CIT vs. M/s Sangameshwara Associates (Karnataka High Court)”

  1. Nem Singh says:

    About harasment of assessee’s soon after assessment proceeding which 90% unlawful and unjustified on the part of department as written by Mr. Vaze in an article “It is unfortunate that on the one hand, there is chaotic ambiguity in the provisions of law; on the other hand, there is no opportunity to disclose your viewpoint proactively. This is aggravated by the ill-motivated administration. Further, conflicting judicial decisions also make the life of an assessee difficult. In the environment an assessee could suffer about 68% outgoing in terms of tax and penalty, apart from interest.”

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