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Imposition of penalty under section 271(1)(c) based on disclosed income from various firms without indicating profit or loss figures. Analysis: The judgment pertains to a case where the Income-tax Appellate Tribunal referred a question regarding the imposition of a penalty under section 271(1)(c) based on disclosed income from multiple firms without specifying profit or loss figures. The assessee, an HUF, filed a return for the assessment year 1964-65, disclosing interests in two firms without finalizing their accounts. The Income Tax Officer (ITO) later discovered additional income from these firms and imposed a penalty, which was reduced by the Tribunal but upheld the calculation method. The crux of the issue revolved around whether penalty should be imposed considering all disclosed income or only specific concealed income. The court analyzed section 271(1)(c)(iii) to determine the penalty calculation criteria. The section mandates a penalty between twenty percent to one and a half times the tax amount avoided if the income as returned had been accepted as correct. The court emphasized that "income as returned" refers to disclosed income by the assessee. Referring to precedents, the court highlighted that an assessee need not wait for finalizing firm accounts before filing returns, as provisions allow rectification post-finalization. Hence, an assessee can disclose interests in firms without specifying profits. The court clarified that penalty is applicable only on concealed income that would have avoided tax if the return had been accepted as correct. The court rejected the department's argument to consider subsequent amendments to section 271(1)(c)(iii) and emphasized that penalty should be levied only on concealed income, not on disclosed interests in firms. Accepting the department's interpretation would unfairly penalize all partners filing returns before firm accounts finalization, contradicting legislative intent. Consequently, the court ruled in favor of the assessee, stating that penalty should apply only to concealed income, not disclosed interests. The judgment did not absolve the assessee from penalty regarding income from a specific firm. The assessee was awarded costs amounting to Rs. 250. This judgment clarifies the interpretation of penalty provisions under section 271(1)(c) concerning disclosed interests in firms without specifying profits and highlights the importance of distinguishing between disclosed and concealed income for penalty calculations.
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