Penalty under section 271(1)(c) upheld on justification and computation method, with no legal error found in the High Court's view.

Penalties under section 271(1)(c) of the Income-tax Act, 1961, read with the Explanation, are discussed in relation to whether the levy was justified for the relevant assessment years and whether penalty computation should rest on the difference between the tax on the original returned income and the tax on the assessed income. The High Court's view on both the justification for penalty and the method of calculating tax sought to be evaded was accepted because no error of law was found in that approach. The discussion therefore reflects that the Revenue's position prevailed on both points and appellate interference was unwarranted.

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Issues: (i) Whether penalties under section 271(1)(c) of the Income-tax Act, 1961 read with the Explanation thereto were justified for the assessment years 1963-64, 1964-65 and 1965-66; (ii) whether, for computing the penalties, the difference between the tax on the income shown in the original returns and the tax on the income assessed was the proper basis for the tax sought to be evaded.

Issue (i): Whether penalties under section 271(1)(c) of the Income-tax Act, 1961 read with the Explanation thereto were justified for the assessment years 1963-64, 1964-65 and 1965-66.

Analysis: The questions had already been answered by the High Court against the assessee, and no error of law was found in that view warranting interference.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

Issue (ii): Whether, for computing the penalties, the difference between the tax on the income shown in the original returns and the tax on the income assessed was the proper basis for the tax sought to be evaded.

Analysis: The High Court's answer on the method of calculation was accepted, and no legal infirmity was found in that conclusion.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

Final Conclusion: The tax penalty reference questions were resolved against the assessee, and the appeals were dismissed without costs.

Ratio Decidendi: Where the High Court's answers on penalty justification and penalty computation disclose no error of law, the appellate court will not interfere and the Revenue's position will stand.

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