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Issues Involved:
1. Constitutionality of Section 297(2)(g) of the Income-tax Act, 1961. 2. Validity of penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961. 3. Alleged concealment of income amounting to Rs. 25,000. 4. Alleged concealment of income amounting to Rs. 11,700. Issue-wise Detailed Analysis: 1. Constitutionality of Section 297(2)(g) of the Income-tax Act, 1961: The petitioner initially challenged the constitutionality of Section 297(2)(g) of the Income-tax Act, 1961, claiming it violated Articles 14 and 20(1) of the Constitution of India. However, in light of Supreme Court decisions and precedents from the Gauhati High Court, the petitioner's counsel did not press this point further. 2. Validity of Penalty Proceedings under Section 271(1)(c) of the Income-tax Act, 1961: The petitioner contested the penalty proceedings initiated by the Income-tax Officer, which were subsequently upheld by the Inspecting Assistant Commissioner of Income-tax and the Commissioner of Income-tax. The petitioner argued that there was no deliberate concealment of income and that the penalty proceedings were not justified under Section 271(1)(c) of the Act. 3. Alleged Concealment of Income Amounting to Rs. 25,000: The petitioner filed a revised return for the assessment year 1960-61, declaring an additional income of Rs. 25,000 under the head "business." During the assessment, the Income-tax Officer found that the petitioner failed to provide detailed particulars of this income. The amount was deposited in the Punjab National Bank in the name of Smt. Gayatri Devi, a partner's wife. The petitioner could not substantiate the existence of the business from which this income was claimed to have originated. Consequently, the Income-tax Officer assessed this amount under the head "other sources" and initiated penalty proceedings for concealment of income. 4. Alleged Concealment of Income Amounting to Rs. 11,700: The Income-tax Officer identified unexplained cash credits totaling Rs. 11,700 in the name of the wives of the partners of the assessee-firm. These amounts were credited in the books of M/s. R. B. Industries, found to be a branch of the assessee-firm. The petitioner explained these credits as savings and gifts, but the Income-tax Officer treated them as income from undisclosed sources. However, upon appeal, the Appellate Assistant Commissioner accepted the petitioner's explanation for these amounts, ruling out deliberate concealment. Judgment: The High Court observed that penalty proceedings are quasi-criminal in nature, requiring the department to establish that the assessee consciously concealed income or deliberately furnished inaccurate particulars. The court noted that the petitioner admitted the additional income of Rs. 25,000 but failed to provide particulars, thereby justifying penalty proceedings under Section 271(1)(c) for this amount. However, since the appellate authority accepted the explanation for the Rs. 11,700, the penalty related to this amount was unjustified. The court set aside the penalty order of Rs. 8,500 and remanded the case to the Inspecting Assistant Commissioner of Income-tax for reconsideration, focusing solely on the Rs. 25,000. No costs were awarded. Separate Judgments: All judges (M. C. Pathak C.J., D. Pathak J., and D. M. Sen J.) concurred with the judgment.
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