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Issues involved:
The judgment involves the issue of penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961, specifically questioning the validity of the penalty imposed due to the failure to specify the particular item/items of the additions on which the penalty may be levied. Summary: The case pertains to an assessee who was assessed by the Income-tax Officer on an income higher than declared, leading to penalty proceedings under section 271(1)(c) resulting in the imposition of a penalty. The Tribunal rejected the application under section 256(1) based on the finding that the assessee did not have a reasonable opportunity to defend the penalty. The Department contended that the additions made to the income were known to the assessee, providing a reasonable opportunity to defend each one. However, the Tribunal held that the jurisdictional fact necessary for the penalty had not been disclosed, as the source of income was not identified. Both the Commissioner and the Tribunal concluded that the assessee did not have a proper chance to defend the penalty proceedings, leading to the cancellation of the penalty order. The Department's appeal against the cancellation of the penalty and the cross-objections by the assessee were unsuccessful. The Tribunal's decision was based on the lack of disclosure of the particular concealment and the need for the Department to prove positively the concealment. The cancellation of the penalty order was affirmed by the Tribunal, emphasizing the importance of informing the assessee of the specific concealment to enable a proper defense. The judgment also discussed the possibility of remanding the case for re-decision, highlighting the principles governing quasi-criminal matters. Reference was made to the case of Guduthur Brothers v. ITO, emphasizing the differences between the provisions of the 1922 Act and the 1961 Act regarding penalty cases. Ultimately, the court rejected the application for reference, stating that the penalty was not imposed in accordance with proper procedure or natural justice, which was deemed a question of fact rather than law.
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