Section 271 (1) (c) of the Income-tax Act, 1961

SECTION 271 (1) (c) PENALTIES

Penalty under clause c of Sub-Section 1 of Section 271 of the Income-tax Act, 1961, if the Assessing Officer or the Commissioner of Income Tax (Appeals) during the course of the Assessment Proceedings under the Act is satisfied that any person has concealed or furnished inaccurate particulars of income. The words concealed or furnished inaccurate particulars of income has been defined either in this Section nor any where else of the Act. One thing is certain that these two circumstances are not identical in details although they may lead to the same effect, namely, keeping a certain portion of the income. The word conceal is derived from the Latin word concelare which implies to hide. It signifies a deliberate act of omission on the part of the assessee. A mere omission or negligence would not constitute a deliberate act suppressio veri or suggestio falsi T. Ashok Pai Vs. CIT (2007) 161 Taxman 340, 292 ITR 11 (SC).

The words furnishing inaccurate particulars of income refer to the particulars which have been furnished by an assessee of his income and the requirements of concealment of income is that income has not been declared at all or is not even recorded in the books of accounts or in a particular case the concealment of the particulars of income may be from the books of accounts as well as from the furnished CIT vs. Raj Trading Co. (1996) 217 ITR 208, 86 Taxman 282 (Raj).

Above provisions of the Section clarifies that:

a) The penalty could only be levied by the Assessing Officer and/or the Commissioner of Income Tax (Appeals) and not higher authorities to that such as Income Tax Appellant Tribunal, High Court, and Supreme Court.

b) It would only be levied during the Assessment Proceedings under the Income-tax Act, 1961.

c) The penalty is in addition to the tax, if any payable by the assessee.

d) Penalty could not be levied where the Total Income of the Assessee is in negative i.e. loss after the completion of the Assessment Proceedings under the Income-tax Act, 1961. Commissioner of Income Tax vs. Rajasthan Vanaspati Product Limited, (2008) 8 DTR (Raj) 282, were it has been held that,