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Issues involved: Interpretation of section 271(1)(c) of the Income-tax Act, 1961 regarding penalty for concealing income.
Summary: The High Court of Madhya Pradesh considered a case where the Income-tax Officer imposed a penalty on an assessee for concealing income by claiming a deduction for sales tax. The Appellate Assistant Commissioner ruled in favor of the assessee, stating that since the deduction had not been claimed previously and was claimed for the first time due to inadvertence, there was no deliberate concealment of income. The Revenue appealed to the Tribunal, which held the assessee liable for penalty under section 271(1)(c) of the Act. The High Court, upon review, emphasized that before imposing a penalty, it must be established that the assessee consciously concealed income. The Tribunal's decision was based on the excessive claim made by the assessee, not on deliberate false claims. As a result, the High Court ruled in favor of the assessee, stating that without evidence of deliberate false claims, the penalty was unjustified under section 271(1)(c) of the Act. In conclusion, the High Court's answer to the question referred was in the negative, favoring the assessee. Each party was directed to bear their own costs in this reference.
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