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Issues involved: Whether the Appellate Tribunal was justified in canceling the penalty u/s 28(1)(c) of the Indian Income-tax Act, 1922.
Summary: The High Court of Andhra Pradesh considered a case where the Income-tax Officer initiated penalty proceedings u/s 28(1)(c) against a firm engaged in mica mining for allegedly concealing income. The firm initially declared an income of Rs. 8,249 but later agreed to an assessment of Rs. 60,000 during discussions with the Income-tax Officer. Subsequently, the Officer completed the assessment at Rs. 1,00,000 and imposed a penalty of Rs. 14,000. The Appellate Assistant Commissioner reduced the total income to Rs. 60,000, which was upheld by the Appellate Tribunal. The Tribunal found that the department failed to prove deliberate concealment by the assessee, considering the circumstances and the agreement for a higher assessment. The Tribunal held that the burden on the revenue to establish concealment was not discharged. The Tribunal's decision was upheld by the High Court, dismissing the income-tax case and directing each party to bear their own costs. In analyzing the case, the Tribunal considered precedents where clear admissions of concealment by assessees shifted the burden of proof. However, in the present case, the only circumstance against the assessee was the agreement to a higher assessment than the returned income, which did not amount to a clear admission of concealment. The Tribunal found that the revenue did not fully discharge its burden of proving deliberate concealment or furnishing inaccurate particulars of income. Therefore, the Tribunal's decision to cancel the penalty was upheld by the High Court based on the lack of conclusive evidence of deliberate concealment by the assessee. The High Court's decision was supported by the reasoning that the possibility of the assessee agreeing to a higher assessment for peace could not be ruled out, and the revenue did not establish deliberate concealment. The Tribunal's conclusion, following the principles laid down in previous cases, was deemed reasonable in the absence of concrete evidence of intentional concealment or furnishing of inaccurate particulars by the assessee. Consequently, the High Court upheld the Tribunal's decision to cancel the penalty u/s 28(1)(c) of the Income-tax Act, 1922, in favor of the assessee.
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