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Issues Involved:
The issues involved in this case are: 1. Imposition of penalty u/s 271(1)(c) of the Income Tax Act. 2. Competence of the Tribunal to reverse its final decision u/s 254(2) of the Act. Imposition of Penalty u/s 271(1)(c) of the Income Tax Act: The case involved a partnership firm engaged in the trade of tobacco and tobacco products for the assessment years 1971-72 and 1972-73. The Income Tax Officer (ITO) assessed higher incomes than those declared by the assessee, including amounts from undisclosed sources. Subsequently, penalty proceedings were initiated u/s 271(1)(c) of the Act, and penalties were imposed by the Income-tax Appellate Tribunal (ITAT) for the undisclosed income. The Tribunal upheld the penalties imposed by the ITO, stating that the assessee had failed to discharge the onus under the section. Competence of the Tribunal to Reverse its Final Decision u/s 254(2) of the Act: The assessee, in a miscellaneous application u/s 254(2) of the Act, sought rectification of a mistake, contending that a relevant decision had not been considered by the Tribunal during the appeal. The Tribunal, upon review, held that the penalties imposed were without jurisdiction and set them aside. The Revenue challenged this decision, arguing that the Tribunal exceeded its jurisdiction by reversing its final decision under s. 254(2) of the Act. The Court, relying on precedent, emphasized that the power under s. 254(2) is for rectification of mistakes apparent from the record and not for review. It concluded that the Tribunal was not legally competent to reverse its final decision in this case. This judgment highlights the importance of adhering to the statutory provisions and the limitations of the Tribunal's powers under the Income Tax Act. The decision underscores the distinction between rectification of mistakes and review, emphasizing the need for errors to be apparent from the record for rectification purposes.
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