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Concealment of income leading to penalty under section 271(1)(c) of the Income Tax Act for the assessment year 1973-74. Analysis: The case involved an appeal by the assessee, a firm, against a penalty imposed by the Income Tax Officer (ITO) under section 271(1)(c) of the Income Tax Act. The penalty was imposed based on the finding that a sum of Rs. 2,500 credited in the books of accounts was not adequately explained by the assessee. The ITO initiated penalty proceedings as the assessee failed to provide a satisfactory explanation for the credit. The assessee later surrendered the amount, leading to its addition to the total income. The penalty was imposed as the ITO believed there was concealment of income by the assessee. During the penalty proceedings, the assessee did not provide a sufficient explanation, leading to the imposition of the penalty. The Appellate Assistant Commissioner (AAC) upheld the penalty, stating that the surrender of the amount indicated concealment of income. The AAC found that the creditor was not in a position to save the amount and that the assessee failed to trace the legal heirs of the deceased creditor. The AAC concluded that there was concealment of income by the assessee. The assessee contended before the Tribunal that the cash credit was genuine and was surrendered due to specific circumstances. The Departmental Representative supported the AAC's order, arguing that the returned income was less than 80% of the finally assessed income, attracting the provisions of section 271(1)(c). However, the Tribunal, after considering the evidence on record, found that there was no conscious concealment on the part of the assessee. The Tribunal noted that the assessee had provided detailed explanations, including evidence that the deposit was genuine and made from the sale proceeds of land. The Tribunal emphasized that penalty proceedings are independent of assessment proceedings and concluded that no penalty was warranted in this case. Ultimately, the Tribunal allowed the appeal, canceling the impugned penalty order, as it found no evidence of fraud, gross neglect, or wilful concealment on the part of the assessee. The Tribunal held that the initial burden of proof was discharged by the assessee, and the Revenue failed to provide positive material to establish conscious failure to disclose income.
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