1979 (8) TMI 69 - HC - Income Tax

Summary

Issues:
1. Whether there was any material before the Tribunal to endorse the finding of the Appellate Assistant Commissioner of Income-tax that the assessee had confessed the concealment of income for Rs. 12,593?
2. Whether the Appellate Tribunal was right in law in imposing penalty upon the assessee under section 271(1)(c) of the Act?

Detailed Analysis:
Issue 1: The assessee, a partnership-firm dealing in yarn, had discrepancies in its books during the assessment year 1964-65. The Income Tax Officer (ITO) found that certain purchases were not accounted for, leading to a recalculation of the total income. The ITO initiated penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961, due to suspected income concealment. The assessee claimed that sales were overstated due to a wrong entry and requested adjustments in the trading account. The Income-tax Appellate Tribunal (ITAT) confirmed the penalty, stating that the case fell under the provisions of section 271(1)(c) and the Explanation to that section. The Tribunal relied on the findings from the assessment order and upheld the penalty.

Issue 2: The assessee argued that the penalty imposition solely based on assessment findings was unjustified. The counsel contended that penalty requires additional evidence of income concealment. However, the court found that the Explanation to section 271(1)(c) applied as the income difference exceeded 20%. The burden of proof to show no fraud or neglect was on the assessee. As the assessee failed to account for all purchases and discrepancies existed, the Tribunal's findings were deemed correct. The court upheld the penalty imposition by the Tribunal under section 271(1)(c) of the Act, ruling in favor of the department and against the assessee. The department was awarded costs amounting to Rs. 200.