Penalty for alleged on-money payment fails where seized material shows income related to a different year.

Penalty under section 271(1)(c) was examined in light of a seized document showing the alleged on-money payment as received on or before 06.10.2006. The material indicated that the amount related to a year different from assessment year 2010-11, so the assessee could contest the year of taxability in penalty proceedings. The prior assessment finding was not conclusive for penalty purposes because concealment must be established independently for the relevant year. On that basis, the penalty was held not sustainable and was deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 could be sustained for assessment year 2010-11 when the seized document showed the alleged on-money payment as having been received on or before 06.10.2006.

Analysis: The penalty arose from an addition under section 69B of the Income-tax Act, 1961 relating to alleged on-money payment for purchase of land. The seized document forming the basis of the proceedings bore the date 06.10.2006, and its contents indicated that the amount had already been received on or before that date. The assessee was held entitled, in penalty proceedings, to question whether the alleged income was taxable in the year selected by the Revenue. The fact that assessment proceedings had reached a different conclusion did not make that finding conclusive for penalty purposes, because penalty proceedings are independent and require separate scrutiny of the factual basis for concealment.

Conclusion: The penalty was not sustainable for assessment year 2010-11 and was directed to be deleted.

Ratio Decidendi: Penalty under section 271(1)(c) cannot be upheld where the material relied upon shows that the alleged income pertained to a different year, since assessment findings are not conclusive in penalty proceedings and the Revenue must establish concealment in the relevant year.

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