Penalty for tax concealment cancelled under Income-tax Act; insufficient evidence found.

The penalty of Rs. 30,000 imposed on the assessee under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1964-65 was cancelled by the Appellate Tribunal and upheld by the High Court. The Tribunal and High Court both found insufficient evidence to prove concealment of income by the assessee, emphasizing that inclusion under section 69A does not automatically imply concealment under section 271(1)(c). The raid by Central Excise authorities and subsequent inclusion of excess cash in total income were not considered conclusive evidence of concealment for the relevant assessment year.

---

---

Issues involved:
The issue involves the cancellation of a penalty of Rs. 30,000 levied on the assessee u/s 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1964-65.

Summary:
The assessee, a firm, was raided by Central Excise authorities, resulting in the discovery of excess cash. The Income-tax Officer included this amount in the total income u/s 69A. A penalty of Rs. 30,000 was imposed u/s 271(1)(c) for alleged concealment of income. The Appellate Tribunal cancelled the penalty, stating lack of evidence to prove concealment. The Tribunal emphasized that inclusion u/s 69A does not automatically imply concealment u/s 271(1)(c). The High Court upheld the Tribunal's decision, ruling in favor of the assessee.

The Tribunal found no evidence besides the inclusion u/s 69A to establish concealment of income by the assessee for the relevant year. The raid occurred after the accounting year, and inclusion was based solely on the raid date falling within the financial year 1964-65. The Tribunal emphasized that u/s 271(1)(c) applies to concealed income for the relevant assessment year, not amounts included u/s 69A.

The High Court affirmed the Tribunal's decision, noting the lack of evidence supporting income concealment by the assessee. The inclusion u/s 69A alone was deemed insufficient to prove concealment u/s 271(1)(c). The Court ruled in favor of the assessee, upholding the cancellation of the penalty.

---