The Supreme Court (SC) on Wednesday dismissed the Income Tax department’s plea alleging that former Nasscom chief Kiran S Karnik had evaded tax to the tune of Rs 3.71 crore in 2002-03 when he was heading Discovery Networks.The I-T department challenged a Gujarat High Court judgement that had dismissed its appeal holding that Karnik could not be held guilty of even deemed concealment.
Karnik, as the managing director of Discovery Networks that owns Discovery channel, had received around Rs 1.30 crore and Rs 3.72 crore for 2001-02 and 2002-03, respectively, from US-based parent of the Indian firm.
A bench, headed by Justice RV Raveendran, refused to interfere in the matter on the grounds that there are two concurrent findings in favour of Karnik. However, it kept the question of law open after Additional Solicitor General Vivek Tankha pointed out that the HC and the tribunal had followed a judgement which was overruled by other decisions of the apex court.
Seeking imposition of penalties which were deleted by the sectoral tribunal under the I-T Act 1961, the department has alleged that Karnik had failed to prove the evidence that he was under bonafide belief that UAP (unit appreciation plan) receipts were not taxable.
According to Tankha, the assessee had not concealed his particulars of his income but had furnished inaccurate particulars of such income.
However, Karnik’s counsel Mahendra Vyas and PK Manohar said that the assessee had claimed exemption from tax as the amount was received in the nature of gifts through his employer in India .
Karnik had furnished full particulars bonafidely believing the same to be true and this was just a mere rejection of claim made by the assessee on the basis of all the facts and materials disclosed in the income tax returns, Vyas said.
He contended that this cannot be said to amount to a case of concealment of income or furnishing incorrect particulars of income so as to make Karnik liable to penalty under Section 271(1)(c) B of the Act.