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1. Exigibility of penalty under section 271(1)(c) of the Income-tax Act, 1961. Analysis: The High Court was tasked with determining whether the penalty was exigible under section 271(1)(c) of the Income-tax Act, 1961. The case revolved around an assessee-firm with two partners, Shri Amrit Lal and Shri Raj Kumar, declaring income from various sources. The firm imported die-steel during the accounting year 1965-66, which was later detained by Pakistan authorities during the Indo-Pakistan War. The insurance company compensated the firm with Rs. 28,680, but the amount was not recorded in the firm's books. Upon discovering this, the Income-tax Officer issued a notice under section 148 of the Act, leading to a penalty under section 271(1)(c) for deliberate concealment of income. The Inspecting Assistant Commissioner imposed a penalty of Rs. 35,800, equivalent to 125% of the concealed amount. The Tribunal, on appeal, reduced the penalty to Rs. 18,846. The assessee contended that the amount was immune from tax under section 41(1) of the Act, but the Tribunal rejected this argument. The High Court upheld the Tribunal's decision, emphasizing that deliberate concealment or furnishing of inaccurate particulars of income attracts penalty under section 271(1)(c), irrespective of the income's nature or source. The Court highlighted that the assessee's conduct, including depositing the concealed amount in a bank without recording it in the books, indicated a deliberate attempt to avoid taxation. The judgment cited legal precedents and emphasized that deeming provisions do not exempt income from penalty if there is deliberate concealment. The Court also noted that the authorities failed to consider relevant provisions of the Act while deciding the case. Ultimately, the High Court ruled in favor of the department, affirming the exigibility of the penalty under section 271(1)(c) of the Income-tax Act, 1961.
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