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Issues:
1. Interpretation of section 271(1)(c) of the Income-tax Act, 1961 regarding penalty imposition. 2. Discharge of negative onus by the assessee under the Explanation to section 271(1)(c). 3. Correctness of Tribunal's decision in cancelling the penalty of Rs. 35,000 imposed by the Inspecting Assistant Commissioner. Analysis: 1. The case involved a registered firm of commission agents also engaged in money-lending business. During assessment, the Assessing Officer found unexplained cash credits in duplicate sets of accounts, treating them as income from undisclosed sources. The Appellate Assistant Commissioner restricted the addition to Rs. 48,869. Subsequently, penalty proceedings under section 271(1)(c) were initiated, leading to the imposition of a penalty of Rs. 35,000 by the Inspecting Assistant Commissioner. 2. The Tribunal, in its judgment, considered various factors and directed a reevaluation by the Appellate Assistant Commissioner. It observed that the conclusions about ownership of duplicate accounts did not automatically imply the genuineness of entries for penalty proceedings. The Tribunal held that the Explanation to section 271(1)(c) was discharged by the assessee, leading to the cancellation of the penalty. 3. The Revenue challenged the Tribunal's decision, arguing that the discharge of onus was incorrect. The High Court noted discrepancies in the Tribunal's analysis and directed a rehearing. It emphasized the need for a detailed reconsideration by the Tribunal based on the principles established by the Supreme Court in relevant cases, including CIT v. Jeevan Lal Sah and CIT v. Mussadilal Ram Bharose. The matter was remitted back to the Tribunal for a fresh review, taking into account the apex court's decisions. This comprehensive analysis of the judgment highlights the key legal issues, the factual background, the Tribunal's decision, the Revenue's challenge, and the High Court's directions for further reconsideration by the Tribunal in light of established legal principles.
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