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Issues:
1. Whether the Tribunal's finding on the omission of disclosing capital gains in the initial returns was based on relevant evidence and not arbitrary? 2. Whether the Tribunal was correct in canceling the penalty order under section 271(1)(c) of the Income-tax Act, 1961? Analysis: Issue 1: The case involved the assessee filing a revised return disclosing capital gains after an ex parte assessment was made. The Assessing Officer levied a penalty under section 271(1)(c) for not disclosing the capital gains in the original returns. The Tribunal set aside the penalty order, deeming the omission as an oversight. The High Court disagreed, stating that the failure to disclose income in the original and revised returns amounted to concealment. The Court found the Tribunal's conclusion perverse, as the capital gains were known to the assessee before filing the returns. The Court held that the Tribunal's decision lacked evidence and upheld the penalty. Issue 2: Regarding the cancellation of the penalty order, the High Court ruled that the Tribunal erred in its decision. The Court clarified that the discretion of the Assessing Officer in levying a penalty is distinct from determining the liability itself. The Court emphasized that the case concerned the liability of the assessee to pay a penalty, not the discretionary aspect. Therefore, the Court found the Tribunal's cancellation of the penalty order under section 271(1)(c) incorrect. Consequently, the High Court answered both questions in favor of the Revenue, affirming the penalty imposition. In conclusion, the High Court upheld the penalty under section 271(1)(c) of the Income-tax Act, emphasizing the assessee's obligation to disclose income in the returns and rejecting the Tribunal's reasoning of oversight. The judgment clarified the distinction between liability determination and discretionary penalty imposition by the Assessing Officer, ultimately ruling in favor of the Revenue in both issues raised.
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