High Court overturns penalty under Income-tax Act for unrecorded cash. Precedent cited, no penalty if conditions met.

The High Court of Allahabad ruled in favor of the assessee, overturning the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961. The case involved surrendered cash not recorded in books of account following a search on the assessee's premises. The court relied on a previous case precedent to support its decision, stating that if certain conditions were met, no penalty would apply. The Tribunal's decision was upheld, emphasizing the lack of enquiries from the assessee and the surrender by the father.

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Issues involved: Interpretation of Explanation 5(2) to section 271(1)(c) of the Income-tax Act, 1961 regarding penalty imposition based on surrendered cash not found recorded in books of account.

Summary:

The High Court of Allahabad was presented with a question of law regarding the justification of the Income-tax Appellate Tribunal's decision on penalty imposition under section 271(1)(c) of the Income-tax Act, 1961. The case pertained to the assessment year 1990-91 and arose from a search conducted on the premises of the assessee and his brother, resulting in cash surrender by the assessee's father. The Assessing Officer imposed a penalty citing non-recording of surrendered cash in the books of account and lack of specification in the relevant statement under section 132(4). The Tribunal, however, overturned the penalty, considering the surrender by the father and absence of enquiries from the assessee. This decision was supported by previous judgments, including one from the Allahabad Benches.

Upon hearing arguments from the learned standing counsel for the Revenue, the court referred to a previous case involving Radha Kishan Goel, where it was established that if the conditions in Explanation 5(2) to section 271(1)(c) were met, no penalty was applicable. Given the Tribunal's reliance on the Radha Kishan Goel case, which was upheld by the court previously, the question was answered in favor of the assessee and against the Revenue. No costs were awarded in this judgment.

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