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Issues involved: Assessment of undisclosed income, imposition of penalty u/s 271(1)(c) of the Income-tax Act, 1961.
Assessment of undisclosed income: The assessee declared receiving prize money from a crossword competition in the return of income. However, the Income-tax Officer found this claim to be false, concluding that the amount was unaccounted money presented as prize money. The Officer added a commission amount to the assessed income, treating it as undisclosed income. The Inspecting Assistant Commissioner upheld this view, imposing a penalty of Rs. 1,35,000. Imposition of penalty u/s 271(1)(c): The Inspecting Assistant Commissioner's penalty imposition was challenged by the assessee before the Appellate Tribunal. Citing a previous decision, the Tribunal canceled the penalty, stating that the assessee did not conceal income or furnish inaccurate particulars. The Revenue appealed this decision, leading to the High Court's consideration of whether the penalty was justified. High Court Judgment: The High Court held that the assessee's claim of prize money from the crossword competition was false, akin to a scheme converting black money into white. Referring to a similar case, the Court emphasized that a significant difference between returned and assessed income could lead to a presumption of concealment or wilful furnishing of inaccurate particulars. As the facts were similar to the precedent case, the Court ruled against the assessee, upholding the penalty imposition. Conclusion: Both questions raised by the Revenue were answered in the negative, favoring the Revenue. The Court's decision aligned with the precedent case's ratio, emphasizing the importance of accurate income disclosure to avoid penalties. The reference was disposed of with no order as to costs.
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