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Issues involved: Assessment of income, concealment of income, penalty under section 271(1)(c) of the Income-tax Act.
Assessment of Income: The assessee filed returns for the assessment year 1959-60, declaring income from property and business. The Income Tax Officer (ITO) determined income from property and business carried on under different names. Additional income was calculated from the sale of imported cycle parts not disclosed in the books, resulting in a total income of Rs. 55,248. Various additions were made, and a penalty under section 271(1)(c) was also proposed. Concealment of Income: The assessee appealed the ITO's order, leading to the Appellate Assistant Commissioner (AAC) revising the profit calculation on the sale of imported cycle parts to Rs. 18,328. The Income-tax Appellate Tribunal upheld this revision. The Income-tax Appellate Tribunal also considered penalty proceedings, where the Income-tax Appellate Commissioner (IAC) imposed a penalty of Rs. 9,700 for concealed income of Rs. 32,969. The Tribunal held that the department failed to prove concealment of income, leading to a reference to the High Court. Penalty under Section 271(1)(c) of the Income-tax Act: The High Court analyzed the case and concluded that the assessee had concealed profits from the sale of imported cycle parts, as admitted by the assessee himself. The Tribunal's decision that the department did not prove concealment was deemed unjustified. The High Court emphasized that when the assessee admits the income, no further evidence is needed to establish concealment. As the income from the sale of cycle parts was not recorded in the books and not disclosed in the return, the levy of penalty by the IAC was deemed justified. The High Court answered the reference question in the negative, in favor of the department, as the assessee had concealed income.
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