1990 (6) TMI 35 - HC - Income Tax

Summary

Issues Involved:
1. Reduction of penalty u/s 271(1)(c) of the Income-tax Act, 1961.
2. Treatment of Rs. 29,000 as unexplained credit and its classification as concealed income.

Summary:

Issue 1: Reduction of Penalty u/s 271(1)(c)
The Tribunal reduced the penalty from Rs. 2,53,351 to Rs. 45,737, holding that the loss returned by the assessee should not be added to the income finally assessed for the purpose of levying penalty. The Revenue argued that income includes loss, and thus, furnishing inaccurate particulars regarding loss should attract penalty u/s 271(1)(c). The assessee contended that "income" in section 271(1)(c) means positive income, not a negative income like loss. The court examined various judicial pronouncements and concluded that the term "income" does not include loss for the purpose of levying penalty u/s 271(1)(c). The Tribunal's decision to reduce the penalty was upheld, as there was no material on record to show that the current loss claimed by the assessee was dealt with in the assessment order or that the assessee furnished inaccurate particulars regarding the loss.

Issue 2: Treatment of Rs. 29,000 as Concealed Income
The Tribunal held that the addition of Rs. 29,000 as unexplained credit should not be treated as concealed income. The Revenue argued that the Explanation to section 271(1)(c) was applicable and the assessee had not discharged the initial burden of proof. The court noted that the assessee had provided books of account and explanations, which were partially accepted by the Tribunal in the quantum appeal. The court found that the assessee had discharged the initial burden of proof, and the Department had not provided any material evidence to show that the assessee had concealed or furnished inaccurate particulars regarding the cash credit. The Tribunal's decision that Rs. 29,000 could not be termed as concealed income was upheld.

Conclusion:
Both questions were answered in the affirmative and against the Department. The Tribunal's decisions to reduce the penalty and not treat the Rs. 29,000 as concealed income were upheld. The assessee was entitled to costs, with counsel's fee fixed at Rs. 500.