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Issues: Assessment of penalty under section 271(1)(c) of the Income Tax Act based on alleged concealment of income and incorrect particulars disclosed in the return.
Analysis: The assessee filed the return of income for the assessment year 1969-70, declaring a total income of Rs. 4,137 and disclosing receipt of Rs. 19,499 as a prize from a crossword competition. The Income-tax Officer completed the assessment under section 144 due to non-compliance with a notice under section 142, determining the total income as Rs. 25,586. Subsequently, penalty proceedings were initiated under section 271(1)(c) for concealment of income. The Income-tax Officer concluded that the assessee concealed income and imposed a penalty of Rs. 20,000. The Appellate Assistant Commissioner, relying on a Tribunal decision, held that penalty imposition was unjustified as the income was disclosed in the return, indicating no gross or willful neglect. The Tribunal upheld this decision, leading the Revenue to seek a reference on two questions related to the justification of penalty imposition. The High Court, in its judgment, disagreed with the Tribunal's decision and held that the penalty imposition was justified. Referring to a previous case involving a similar fraudulent scheme in a crossword competition, the court found that the prize money disclosed in the return was fraudulently mentioned to convert unaccounted money into white money. The court emphasized that the Explanation to section 271(1)(c) allowed for penalty imposition in such cases of fraudulent disclosure. Citing precedent, the court concluded that the Revenue was entitled to levy the penalty under the said provision. Therefore, the court answered both questions in the negative, ruling against the assessee and in favor of the Revenue, upholding the penalty imposition under section 271(1)(c) of the Income Tax Act.
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