2007 (1) TMI 593

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....e and penalty under section 271(1)(c) was not exigible ?" The reference relates to the assessment year 1980-81. In respect of the penalty imposed under section 271(1)(c) of the Act. 2. Briefly stated the facts giving rise of the present reference are as follows: The assessee is an individual and is doing proprietary business of job-work in leather tanning in the name of M/s. Vijay Industries, Kanpur. Return showing net loss of ₹ 38,314 was filed on 1-3-1983 in compliance to notice issued under section 148 of the Act. The assessment in this case was, however, completed vide order dated 14-3-1985 on total income of ₹ 2,29,030 which, inter alia, included disallowance under section 36(1)(iii) of interest of ₹ 1,98,607....

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....ommissioner of Income-tax (Appeals) reduced the quantum of penalty to minimum at ₹ 1,30,467 and allowed relief of ₹ 65,226 to the assessee. Thereafter, the assessee had filed second appeal against the above order of Commissioner of Income-tax (Appeals). The Tribunal vide order in I.T.A. No. 875 (All.)/1988, dated 27-4-1993 have cancelled the aforesaid penalty order on the ground that the ingredient of section 271(1)(c) of the Act was not present in this case and, therefore, the penalty under section 271(1)(c) of the Act is not exigible. It was also held by the Tribunal in quantum appeal that the addition was justified but that fact by itself will not justify the imposition of penalty under section 271(1)(c) of the Act. It has fu....

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....ich is found by the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) to be false, or (B)such person offers an explanation which he is not able to substantiate, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed : Provided that nothing contained in this Explanation shall apply to a case referred to in clause (B) in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bona fide and all the facts relating to the same and mater....