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Issues involved:
The issue involves the cancellation of a penalty u/s 271(1)(c) for concealment of income for the assessment year 1976-77, based on the agreement between the assessee and the Revenue, and the validity of the penalty imposed. Judgment Details: 1. Assessment and Revised Returns: The assessee initially filed a return showing income at Rs. 11,310 for the assessment year 1976-77, which was later revised to Rs. 69,800. Subsequently, revised returns were filed for the years 1972-73, 1973-74, and 1974-75, disclosing a total income of Rs. 3,00,840. The Income-tax Officer found the books unreliable and the income stated in the revised returns unacceptable. The total income for the years 1972-73 to 1977-78 was estimated at Rs. 6,00,000, with an allocated income of Rs. 1,44,000 for 1976-77. 2. Penalty Proceedings: After agreeing to the total estimated income, the assessee faced penalty proceedings u/s 271(1)(c) for concealment of income. The penalty was levied at 100% of the tax levied, being the minimum penalty. The assessee contended that the penalty should not have been imposed due to the agreement with the Revenue. 3. Tribunal's Decision: The Appellate Tribunal found that the assessment was solely based on a settlement letter dated March 28, 1979, and disregarded other factors like the survey and revised returns. The Tribunal held that since the assessment was made based on the agreement with the assessee, no penalty should be imposed. The Tribunal emphasized that the penalty lacked foundation without considering the letter in its entirety. 4. Court's Decision: The Court rejected the assessee's contention, noting that the assessment was not based on any concession by the assessee. The Court emphasized the concealment of income in the filed return and stated that there was no clear agreement by the Revenue to act on the letter. The Court upheld the imposition of the penalty, answering the question in the negative and in favor of the Revenue. Conclusion: The Court upheld the penalty imposed u/s 271(1)(c) for concealment of income for the assessment year 1976-77, emphasizing the lack of a clear agreement between the assessee and the Revenue to waive the penalty despite the assessment being based on an estimated income agreed upon by the assessee.
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