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Issues:
1. Imposition of penalty under section 271(1)(c) of the IT Act, 1961. 2. Failure to disclose fully and truly all material facts by the assessee. 3. Application of Explanation to section 271(1)(c) by the Revenue. 4. Principles of natural justice in penalty imposition. Analysis: The judgment deals with an appeal against the penalty imposed on the assessee under section 271(1)(c) of the IT Act, 1961. The penalty was confirmed by the AAC and was based on the failure of the assessee to disclose all material facts necessary for assessment. The assessee had declared a loss in the return of income for the assessment year 1973-74 but had provided details of property transactions in a letter to the ITO. The ITO, however, completed the assessment without considering this information. The penalty was levied by the ITO, and the AAC upheld it. The Tribunal analyzed the facts and concluded that the assessee had indeed disclosed all material facts regarding property transactions to the ITO at the time of the original assessment proceedings. The Tribunal noted that the ITO ignored the evidence provided by the assessee and completed the assessment without reference to it. The Tribunal also observed discrepancies in the re-assessment proceedings and the order of the AAC, indicating that the assessee had, in fact, disclosed the relevant details. Therefore, the Tribunal held that there was no failure on the part of the assessee to disclose fully and truly all material facts. The Revenue contended that the penalty should be converted into an order under the Explanation to section 271(1)(c). However, the Tribunal dismissed this contention, stating that the ITO did not consider the Explanation during the assessment and that applying it would require a detailed factual inquiry. The Tribunal emphasized that it is not an investigating agency and cannot initiate proceedings for investigation. Since the principles of natural justice were not followed by the authorities in giving the assessee an opportunity, the Tribunal rejected the Revenue's contention. In conclusion, the Tribunal allowed the appeal, setting aside the penalty imposed on the assessee under section 271(1)(c) of the IT Act, 1961.
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