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Issues: Appeal against penalty imposed under section 271(1)(c) of the 1961 Act for non-disclosure of income from race winnings.
Analysis: 1. The case involved an appeal against a penalty of Rs. 2,37,000 imposed under section 271(1)(c) of the 1961 Act by the I.A.C. The assessee had shown a sum of Rs. 1,58,250 as non-taxable income from race winnings in the returns but the ITO treated it as undisclosed income under section 69. The A.A.C. later deleted this amount from the total income of the assessee, but the Tribunal reversed this decision. 2. The I.A.C. imposed the penalty based on the conclusion that the assessee had not earned the disclosed amount from races and had furnished inaccurate particulars of income. The penalty was nearly 150% of the tax sought to be evaded. The assessee appealed, arguing that the disclosure in the return justified the claim and highlighted the difference of opinion between authorities regarding the nature of the income. 3. The Tribunal found that the case was not suitable for penalty under section 271(1)(c) as there was an honest difference of opinion between the assessee and the taxing authorities regarding the nature of the income. The assessee consistently claimed the amount as a casual and non-recurring receipt, exempt from taxation under section 10(3). Despite the disagreement on the treatment of the income, the assessee had disclosed it in the return, indicating no intention to conceal information from the department. 4. The Tribunal emphasized that the assessee's case did not fall within the purview of section 271(1)(c) as there was no element of concealment involved. The disclosure of income in the return, even if disputed by the authorities, demonstrated transparency on the part of the assessee. Therefore, the Tribunal allowed the appeal and canceled the penalty imposed by the I.A.C.
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