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Issues:
- Whether the Tribunal was right in law in deleting the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961. Analysis: The High Court of Madhya Pradesh was presented with the question of law regarding the deletion of a penalty by the Income-tax Appellate Tribunal. The case involved an assessee who had filed a return showing a total income of Rs. 3,300 for the assessment year 1964-65. However, the assessment order computed the total income at Rs. 27,503, with an additional income of Rs. 24,203 from undisclosed sources. Subsequently, a penalty of Rs. 24,300 was imposed under section 271(1)(c) of the Act, which the Tribunal set aside on appeal by the assessee. The Commissioner of Income-tax contended that the burden of proof regarding concealment of income or furnishing inaccurate particulars lay on the assessee, especially considering the significant discrepancy in the reported and assessed income. Referring to the Explanation added to section 271(1)(c) of the Act, it was argued that the burden was on the assessee to prove the absence of fraud or wilful neglect in reporting the income. The court cited the case of Brij Mohan v. CIT, emphasizing that the law in effect at the time of the wrongful act determines the penalty, regardless of the assessment year to which the income relates. The court concluded that the law applicable at the time of filing the return and the act of concealment was relevant. Therefore, the Tribunal's decision to delete the penalty was deemed incorrect in law. The matter was remanded to the Tribunal for a fresh decision based on the court's observations. Ultimately, the court answered the question in the negative, in favor of the Department and against the assessee, with no costs awarded due to the absence of representation on behalf of the assessee.
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