1975 (3) TMI 8 - HC - Income Tax

Summary

Issues involved: Assessment of penalty u/s 271(1)(c) of the Income-tax Act, 1961 on the legal representative of a deceased assessee for alleged concealment of income.

Summary:
The case involved the assessment of penalty u/s 271(1)(c) of the Income-tax Act on the legal representative of a deceased assessee. The deceased had income from various sources, and the Income-tax Officer made significant additions to the income, including a sum of Rs. 2,400 on account of salary received from the Government. The Inspecting Assistant Commissioner of Income-tax levied a penalty of Rs. 26,000 based on the income assessed. The Tribunal, however, found no concealment in relation to the salary amount not included in the return and canceled the penalty. The Commissioner challenged this decision, leading to the reference of two questions to the High Court.

Question 1:
The Tribunal had initially raised a question regarding the applicability of the Explanation to section 271(1)(c) of the Act. The High Court reframed the question to determine whether the Explanation was attracted in the case. The court answered this in the affirmative, stating that the Explanation applied as the assessee had filed the return after the Explanation came into effect.

Question 2:
The Tribunal found that the assessee was not guilty of concealment based on various circumstances, including the insignificant amount of the omitted salary compared to the total income and the lack of evidence of deliberate tax evasion. The court held that this finding was a matter of fact and could not be challenged in a reference. Despite the applicability of the Explanation, the presumption of concealment was rebutted by the circumstances of the case, leading to the cancellation of the penalty by the Tribunal. The court agreed with this decision, emphasizing that the burden of proof becomes immaterial when concealment is decided based on the evidence on record.

In conclusion, the High Court upheld the Tribunal's decision to cancel the penalty, stating that the second question was not a question of law. The assessee was awarded costs amounting to Rs. 200.