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Issues:
1. Revision of penalty imposed under section 271(1)(a) of the Income Tax Act, 1961. 2. Application of section 273A of the Act for waiver or reduction of penalty. 3. Full disclosure of income and inadvertent mistakes in filing returns. Analysis: The judgment pertains to a petition challenging the order of the Commissioner of Income-tax imposing a penalty under section 271(1)(a) of the Income Tax Act, 1961. The petitioner, a firm engaged in hundi banking, filed its return belatedly for the assessment year 1964-65. The Income Tax Officer initiated proceedings under section 147(b) to tax income that had escaped assessment due to partners using part of the business premises for personal use. Subsequently, a penalty of Rs. 18,070 was imposed on the firm. The petitioner sought revision under section 271(4A) of the Act, which was rejected by the Commissioner based on non-satisfaction of the conditions for waiving or reducing the penalty. The Commissioner held that the disclosure of income was not full as the fact of partners using part of the premises for personal use was not disclosed during the original assessment. The court emphasized that the second assessment under section 147(b) for escaped income does not relate to the explanation for the delayed filing of the return. The court cited a case to illustrate that inadvertent mistakes in returns do not necessarily amount to gross negligence or wilful neglect. The judgment highlighted that the failure to disclose certain income due to oversight, such as the portion of rent assessable as personal to partners, does not constitute wilful negligence or concealment. The court concluded that the Commissioner misapplied the law and set aside the order, remitting the matter to the Commissioner for a fresh decision in accordance with the law. The judgment underscores the importance of a proper assessment of circumstances before imposing penalties and the distinction between inadvertent errors and deliberate concealment in income tax matters.
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