1979 (8) TMI 42

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....ribunal cancelling the penalties of Rs. 25,000 each for the assessment years 1962-63 and 1963-64 levied by the Inspecting Assistant Commissioner under section 271(1)(c) is sound in law ? " We may notice the material facts which gave rise to this question. The respondent-assessee is a registered firm. For the assessment years 1962-63 and 1963-64, corresponding to the accounting years ending with March 31, 1962, and March 31, 1963, respectively, assessments of the assessee-firm were completed under s. 143(3) read with s. 147 of the I.T. Act, 1961, on February 11, 1970. The assessee could not satisfactorily explain cash credits and finally offered for assessment sums of Rs. 25,000 each representing peak credits on hundies. The ITO added the....

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....s of Rs. 25,000 for each of the assessment years under s. 271(1)(c), claiming the same to be the minimum imposable under law, by his order dated January 22, 1972. The IAC had based his penalty order on the acceptance of the assessee in respect of the addition of Rs. 25,000 as income from undisclosed sources. To the protest of the assessee's representative that the penalty sought to be levied was very heavy, it was mentioned that it was the minimum penalty leviable under law. Aggrieved by the levy of penalties by the IAC, the assessee preferred appeals to the Income-tax Appellate Tribunal. It filed an affidavit in support of its stand that cash credits representing the hundi loans were proved by the assessee by the production of the original....

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....annot 16 said to be genuine and valid so as to subject the assessee to the imposition of the minimum penalties. The Tribunal further found that a plain reading of the orders of penalty passed by the IAC indicates that they do not at all refer to or establish the ingredients of the offence with which the assessee is charged, namely, concealment of income. Relying upon the decision of the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696, it was held that the case of the assessee is one of agreed addition of Rs. 25,000 for each of the assessment years in respect of unproved deposits and no culpable or wilful negligence on the part of the assessee was involved and, therefore, no penalties under s. 271(1)(c) of the Act are justified. In th....