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1995 (7) TMI 60 - HC - Income Tax

Issues:
Challenge to penalty order under section 271(1)(c) of the Income-tax Act, 1961 and dismissal of revision petition against the penalty order.

Detailed Analysis:

The petitioner challenged an order levying a penalty under section 271(1)(c) of the Income-tax Act, 1961, and a subsequent order dismissing the revision petition against the penalty. The petitioner's explanation for the penalty was based on the surrender of a sum of money and cash found in the books of account. The Assessing Officer accepted part of the explanation but levied a penalty on the remaining amount. The petitioner contended that no penalty could be levied as no valuable article was found during the search, citing a previous order canceling a penalty for a similar reason. However, the court found this argument untenable as the addition was based on entries in loose papers, which were considered investments not recorded in the books of account, justifying the penalty under section 69 of the Act.

The petitioner failed to substantiate the explanation for the penalty and did not challenge the addition through an appeal against the assessment order. The court emphasized that questions of fact regarding the justification of the addition and the validity of the explanation could not be re-examined under article 226 of the Constitution. The court also rejected the argument that the Commissioner should have followed a previous decision by the Commissioner of Income-tax (Appeals) in a different year, stating that decisions on one year's penalty do not bind independent proceedings for another year.

Lastly, the petitioner claimed that the return was filed after an agreement with the Assessing Officer, but the court found no evidence to support this claim. The court noted that the income declared in the return differed from the assessed income, and there was no objection raised against the addition during the assessment. The court concluded that there was no error in the Commissioner's order dismissing the revision petition against the penalty order, leading to the dismissal of the writ petition with costs.

 

 

 

 

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