TaxTMI 
TaxTMI 
1979 (9) TMI 51
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....meaning of section 271(1)(c) read with the Explanation of the Income-tax Act, 1961 ? " The facts are simple. The assessee is an unregistered firm and the matter relates to levy of penalty on the said firm under s. 271(1)(c) of the Act. The assessment year in question is 1968-69 to which the said Explanation to s. 271(1)(c) of the Act would be clearly applicable. In terms of the said Explanation, where the total income returned by any person is less than eighty per cent. of the total income assessed, such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part be deemed to have concealed the particulars of his income or furnished inaccurate particul....
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....credit was not considered satisfactory, it could not entail the levy of penalty on it. Now, the IAC, who was dealing with the penalty matter, observed that since the assessee accepted the addition of Rs. 5,400 on the condition set out in its letter, such a condition could not absolve it from the levy of penalty. The IAC then held: "In the circumstances concealment of income to the extent of Rs. 5,400 is proved beyond doubt and the assessee is liable for penalty for this concealment within the meaning of section 271(1)(c) of the Act." The assessee then took an appeal to the Income-tax Appellate Tribunal and contended that the nature and source of the cash credit of Rs. 5,400 having been duly explained by it as a loan from Shri Gouri Shank....
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....that obviously the trend of the order of the Tribunal indicated that it was oblivious of the provisions contained in the Explanation to s. 271(1)(c) of the Act, because had that not been so, there would have been no necessity for the Tribunal to make a reference to the decision of the Punjab High Court in the case of Gumani Ram Siri Ram [1972] 85 ITR 67. Such being the position, according to Mr. Rajgarhia, the principle enunciated by this court in the case of CIT v. Parmanand Advani (Tax Case No. 133 of 1971 - judgment dated August 1, 1978) (since reported in [1979] 119 ITR 464) should apply, and the question must be so answered that the Tribunal may look into the facts over again and then decide as to whether or not the levy of penalty on ....
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....should have been posed for answer by this court. If there is no concealment of income, there can be no occasion to levy a penalty upon the assessee for concealment. Mr. Rajgarhia has, however, urged that the assessee had conceded to the additions in the assessment and thereby it should be presumed that the said amount was the assessee's concealed income. It is difficult to accept such an argument. The assessee, no doubt, conceded to the addition of the said sum of Rs. 5,400 to its income in the assessment proceeding, but all the same had clearly stated that let this concession be not used for the purpose of levy of penalty for concealing income and no penalty should be levied upon it for having permitted the department to make this additio....
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....ered by the assessee would be true or could even be probable. This is the least that the department is expected to do. Only then the department would be justified in taking recourse to action under s. 271 (1)(c) of the Act read with the Explanation thereto. Mr. Rajgarhia has referred to one of the decisions of this court in the case of CIT v. Parmanand Advani [1979] 119 ITR 464. In that case, this court had to answer the question against the assessee because it was found that the Tribunal, while setting aside the levy of penalty on the assessee, was oblivious of the effect of the provision of the Explanation to s. 271(1)(c) of the Act, as if there was no such provision in the Act and only the old provisions were there for dealing with pena....