Court upholds Tribunal decision canceling penalty under Income-tax Act due to assessee's self-disclosure in revised return.

The court upheld the Tribunal's decision to cancel the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 on the assessee for concealment of income. The concealment was rectified by the assessee through a revised return, and since there was no external discovery of the concealment by the Revenue before the revised return was filed, the penalty was deemed unwarranted. The court emphasized that the self-disclosure by the assessee in the revised return absolved them from the penalty, aligning with the provisions of section 271(1)(c) of the Act.

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Issues Involved:
The judgment deals with the imposition of penalty u/s 271(1)(c) of the Income-tax Act, 1961 on the assessee for concealment of income and furnishing inaccurate particulars for the assessment year 1965-66.

Imposition of Penalty u/s 271(1)(c):
The court examined whether the Appellate Tribunal was correct in canceling the penalty of Rs. 78,600 imposed u/s 271(1)(c) of the Act. Section 271(1)(c) provides for penalty if the assessee has concealed income or furnished inaccurate particulars. The law states that the penalty should not exceed twice the tax sought to be evaded, implying intentional concealment by the assessee.

Factual Background and Tribunal's Decision:
The assessee, a partnership-firm in the business of manufacturing and selling art silk cloth, initially filed a return showing an income of Rs. 8,274 which was later revised to Rs. 22,970. The concealment was noticed only in the revised return where the assessee disclosed income from the sale of import licenses. The Tribunal held that the concealment in the original return was rectified by the revised return, and since there was no discovery of concealment by the Revenue before the revised return was filed, the penalty was canceled.

Conclusion:
The court agreed with the Tribunal's decision, emphasizing that the concealment was self-disclosed by the assessee through the revised return, and there was no external discovery of the concealment. Therefore, the imposition of penalty was unwarranted. The judgment reflects a correct interpretation of the law u/s 271(1)(c) of the Act.

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