1979 (2) TMI 50 - HC - Income Tax

Summary

Issues Involved:
The issues involved in the judgment are whether the Appellate Tribunal was right in law in cancelling the penalty levied under section 271(1)(c) of the Income-tax Act, 1961, and whether the conclusion of the Appellate Tribunal is a reasonable view to take on the facts and circumstances of the case.

Issue 1: Penalty under Section 271(1)(c):
The assessee had discrepancies in the entries regarding borrowings and repayments from four parties in the previous assessment year. The Income Tax Officer (ITO) considered these transactions as "bogus hawala transactions" and added a sum to the assessment, which the assessee agreed to without appeal. The Income-tax Appellate Tribunal (ITAT) cancelled the penalty levied by the Income-tax Appellate Commissioner (IAC) under section 271(1)(c) based on the preponderance of probability in favor of the assessee's explanation. The Tribunal referred to legal precedents and held that the penalty could not be levied as the assessee had admitted the amounts as its income, eliminating the need for further evidence to establish concealment.

Issue 2: Legal Precedents and Interpretation:
The judgment discussed legal precedents such as CIT v. Anwar Ali and Hindustan Steel Ltd. v. State of Orissa to support the view that once the assessee admits that an amount represents its income, no additional evidence is required to establish concealment. The court disagreed with a Punjab High Court decision that required additional evidence even after the assessee's admission. The judgment also referenced other decisions from the court regarding penalty provisions under section 271(1)(c) and the implications of revised returns on concealment cases. The court emphasized that an admission by the assessee regarding income eliminates the need for further evidence of concealment.

Conclusion:
The High Court held that the Tribunal was wrong in cancelling the penalty under section 271(1)(c) as the assessee's admission of the amount as income was sufficient to establish concealment. The questions were answered in the negative and in favor of the revenue, allowing the revenue to claim costs.