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Issues involved: Interpretation of burden of proof for imposing penalty under section 271(1)(c) of the Income-tax Act, 1961 based on a disclosure petition filed by the assessee under section 271(4A).
Summary: The High Court of Calcutta addressed the question of law referred by the Commissioner of Income-tax regarding the burden of proof for imposing penalty under section 271(1)(c) of the Income-tax Act, 1961. The case involved credits in the books of the assessee, claimed as loans taken on hundis from various persons. The Income-tax Officer treated a sum as undisclosed income, initiating penalty proceedings. The assessee filed a disclosure petition under section 271(4A) post-assessment, which was not accepted. The Inspecting Assistant Commissioner imposed a penalty, which was challenged in appeal. The Tribunal considered the disclosure petition and found no unequivocal admission by the assessee that the amounts represented concealed income. It emphasized that the Revenue cannot rely on a disclosure petition unless there is a clear admission of concealment. The Tribunal concluded that the burden of proof still lay on the Revenue to establish concealment or inaccurate particulars by the assessee before imposing a penalty. The Tribunal highlighted that the mere addition of amounts by the Income-tax Officer and non-acceptance of the disclosure petition did not automatically imply concealment. Referring to precedent, the Tribunal emphasized the need for a clear admission of concealment in the disclosure petition. Ultimately, the High Court ruled in favor of the assessee, stating that without a specific admission of concealment, the burden of proof remained on the Revenue to establish concealment or inaccurate particulars for penalty imposition. In conclusion, the High Court answered the question in the reference in the affirmative and in favor of the assessee, emphasizing the importance of a clear admission of concealment for penalty imposition.
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