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Issues involved: Assessment of undisclosed income, levy of penalty under section 271(1)(c) of the Income-tax Act, 1961.
Assessment of Undisclosed Income: The assessee, engaged in shroff shop and pawnbroking, undertook reconstruction of his residential house during 1968-1970 without disclosing the cost of reconstruction during original assessment for 1971-72. Subsequent wealth-tax proceedings revealed undervaluation of the house, prompting reassessment. The Inspector estimated reconstruction cost at Rs. 98,000, higher than the admitted Rs. 50,000. The Income Tax Officer (ITO) added Rs. 18,000 for each of the three years under "Business income" due to non-disclosure and initiated penalty proceedings. Levy of Penalty: The ITO imposed a penalty of Rs. 18,000 for 1971-72, which was reduced to Rs. 15,000 by the Appellate Authority Commissioner (AAC). The Tribunal upheld the penalty citing conscious concealment of income by the assessee, who then sought reference on various legal questions. The Tribunal found that the assessee admitted to suppressing income of Rs. 15,000 for 1971-72, which was not retracted during penalty proceedings. Judgment: The High Court dismissed the petition, upholding the Tribunal's decision. It emphasized that the Department could rely on the assessee's admission of non-disclosure unless retracted, especially when there was inconsistency in statements between original and reassessment stages. The Court rejected the argument that an independent inquiry was necessary for establishing wilful non-disclosure, stating that the Department could act on materials gathered during assessment if the assessee did not challenge them. The Court agreed with the Tribunal's findings, concluding that no reference to the Court was warranted, and dismissed the petition without costs.
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