COMMISSIONER OF INCOME TAX Vs. B SAROJA DEVI

JUDGEMENT

(1.) PURSUANT to the direction of this court in T.C.P. No. 88 of 1982, the Tribunal referred the following question for the opinion of this court under section 256(2) of the Income-tax Act, 1961"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in cancelling the penalty of Rs. 33, 153 imposed under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 1973-74?" * The assessee is a film artiste, in the assessment year 1973-74, in whose assessment, a number of additions were made. Penalty of Rs. 33, 153 was levied by the Inspecting Assistant Commissioner in respect of two of the items, namely, and addition of Rs. 2, 153 estimated as income from self-occupied residential property and Rs. 25, 000 in respect of capital gains out of Gowrivakkam lands. On appeal, the Tribunal found that the construction of the property and the properties themselves were under the purview of the Income-tax Officer.

(2.) THE assessee had claimed that the residential property was occupied only in April, 1971. THE Tribunal found that the income was a notional one and that there is no positive information that the assessee had really occupied it notwithstanding the fact that it was ready for occupation and hence there was no case for penalty in respect of this amount of Rs. 2, 153, especially since all the particulars of ownership of the property were disclosedAs regards the capital gains, it was found that this property, which stood in the name of her husband was admitted as her property in pursuance of a settlement petition filed before the Commissioner of Income-tax and that the acquisition of the property was in 1965-66. THE Tribunal found that even the addition in respect of the cost of acquisition did not justify levy of penalty as the addition was due to the assessee's admission. Also the tax on capital gains would not merit penalty. It was found that it was admitted, with a view to purchase peace with the Department even as stated in the communication addressed by the assessee to the Commissioner of Income-tax while admitting cost of acquisition for tax purposes. It was further found that apart from this fact, there was nothing in the assessment order or the penalty order to justify the imposition of penaltyBefore us, learned standing counsel for the Department submitted that when the assessee herself has admitted the ownership of the property, the Department has established concealment under section 271(1)(c) of the Act.

(3.) THE property was treated as belonging to the assessee on her voluntary admission. This admission was made as a measure of compromise subject to the condition that penalty will not be levied. Admittedly, the property was originally purchased in the name of the accountant, who in turn sold the same to the husband of the assessee. Since, the assessee admitted that the purchase money belongs to her, the Department came to the conclusion that the property belongs to her. Inasmuch as both the properties and the sale of a property was disclosed to the Department, it cannot be said that there is any concealment with regard to capital gains. In view of this factual position, we consider that the Tribunal was correct in deleting the penalty of Rs. 25, 000 levied under section 271(1)(c) of the Act. Accordingly, we answer the question referred to us in the affirmative and against the Department. No costs.