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Assessment of penalty under section 271(1)(c) of the Income-tax Act, 1961 based on revised return and admission of the assessee. Analysis: The case involved a reference application by the assessee under section 256(2) of the Income-tax Act, 1961, seeking direction for the Income-tax Appellate Tribunal to refer questions raised by the petitioner to the High Court. The assessee had initially declared an income of Rs. 75,000 for the assessment year 1966-67, but the Income-tax Officer assessed it at Rs. 1,41,595. Subsequently, after proceedings under section 147(a) were initiated, the assessee submitted a revised return declaring an income of Rs. 2,25,707, leading to penalty proceedings under section 271(1)(c) where a penalty of Rs. 40,000 was imposed after negotiations. The Tribunal upheld the reduced penalty, and the assessee's application for reference to the High Court was rejected. The High Court, after considering the arguments presented, noted that the penalty imposed was reduced from Rs. 84,112 to Rs. 40,000 based on the admission made by the assessee's representative. The counsel for the assessee contended that the admission should not be conclusive and that penalty should only be imposed as per the provisions of section 271 of the Act. However, the court held that the imposition of a penalty of Rs. 40,000 was valid as the revised return showed an income of Rs. 1,41,595, which was still less than the assessed income of Rs. 2,25,707, making the assessee liable for a penalty of 100% on the income assessed on June 29, 1974. Ultimately, the court found no question of law that required consideration and dismissed the reference application. The judgment emphasized that the penalty imposed on the assessee was in accordance with the provisions of the Act and upheld the Tribunal's decision to reduce the penalty to Rs. 40,000 based on the admission during the proceedings.
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