2. Penalty U/s.271(1)(c)
Penalty u/s 271(1)(c) can be imposed
by A.O.,C.I.T(A), C.I.T.
Concealment penalty on two counts:
(A) Concealing particulars of income.
(B) Furnishing inaccurate particulars
of income.
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3. Penalty U/s.271(1)(c)
Law before 1964.
In the case of Anwar Ali 76 ITR 696 the
Supreme Court held that penalty
proceedings are quasi- criminal
proceedings. Conscious and deliberate
concealment (Mens-Rea) had to be
proved by Revenue.
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4. Penalty U/s.271(1)(c)
F.A. 1964, deleted the word
“deliberately”
and added explanation.
Expl.1, Substituted in 1976, amended in
1986, operative now.
Expl.1(B) amended in 1986 by
inserting- “fails to prove that such explanation is
bonafide ..……..………………………total income has
been disclosed by him”.
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5. Penalty U/s.271(1)(c)
Expl. 1, with proviso ‘A’ & ‘B’
In respect of any fact material to
computation of total income:
Assessee fails to explain
Explanation offered, held false.
Fails to substantiate explanation.
Fails to prove its bonafides and that
all facts have been disclosed by him.
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6. Penalty U/s.271(1)(c)
Explanation 2 :
Intangible additions made in earlier
years, no penalty levied.
Subsequent reliance to explain
Assets/Investments.
Intangible additions to be treated as
concealed income of earlier years.
Sec.271(1A). Empowers penalty
proceedings even after limitation.
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7. Penalty U/s.271(1)(c)
Explanation 3 :
Two Dimensions.
Prior to Finance Act, 2002 :
Presumption of concealment for
non filers only.
Post Finance Act, 2002 : Covers
stop filers also.
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8. Penalty U/s.271(1)(c)
Explanation-4
Tax sought to be
evaded defined.
Penalty @ 100% to 300% of tax
sought to be evaded.
A) Cases of returned Loss.
Prithipal Singh 249 ITR 670 SC. No
penalty if both returned income &
assessed income is a Loss.
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9. Penalty U/s.271(1)(c)
Prithipal Singh no longer holds good
in view of amended Expl. 4 (F.A. 2002)
Tax on amount added in loss cases
will be “tax sought to be evaded”.
(B) In case of Expl. 3, tax on total
income assessed.
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10. Penalty U/s.271(1)(c)
(C) In other cases –the
difference between tax on total
income assessed and tax on total
income minus concealed income.
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11. Penalty U/s.271(1)(c)
Time limit Sec 275-Order imposing
penalty shall be passed :
(a) within the F.Y. in which the original
proceeding was completed,
or
(b) within 6 months from the end of the
month of receipt or passing of
appellate or revision order by CCIT/CIT,
or
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12. Penalty U/s.271(1)(c)
(c) within 6 months from the end of the
month of initiation of penalty
proceeding- whichever expires later.
In case of appellate order passed by
CIT(A) on or after 1.6.2003 penalty
order shall be passed within one year
from the end of F.Y. in which the
appellate order was received by the
CIT/CCIT.
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13. Penalty U/s.271(1)(c)
- Concealment detected,
- Additions made,
- Penalty u/s 271(1)(c) imposed,
- Additions are deleted or varied by
CIT(A) or ITAT,
- Can penalty be modified on the
basis of such appellate order ?
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