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Issues:
1. Imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961. 2. Application of Explanation to section 271(1)(c) for concealment of income. 3. Justification of penalty based on the evidence presented during the penalty proceedings. Detailed Analysis: 1. The appeal was against the penalty imposed by the Income-tax Officer under section 271(1)(c) of the Income-tax Act, 1961, confirmed by the AAC. The penalty was levied due to the assessee deliberately furnishing inaccurate particulars in respect of income, amounting to concealment. The assessee challenged the penalty on various grounds, including the exclusion of the Explanation to section 271(1)(c) by the Income-tax Officer at the time of penalty imposition. 2. The assessee argued that there was no basis for the penalty as there was no evidence of concealment, only an addition to the total income due to excessive shortage of stocks. The assessee contended that the penalty was unjustified as there was no fabrication of accounts or extra stock purchased outside the books of account. The assessee also relied on various judgments to support their case. 3. The revenue, on the other hand, argued that the Explanation to section 271(1)(c) should be applied, even if not invoked initially, based on the totality of circumstances. They contended that the assessee's reliance on certain judgments was irrelevant. Additionally, the revenue submitted that penalty could be levied even on estimated income based on previous court decisions. 4. The Tribunal carefully considered the submissions from both sides and examined the evidence. It was noted that the charge of concealment was not justified based on the facts presented. The Tribunal emphasized that penalty proceedings are independent of assessment proceedings and must be supported by separate evidence. The Tribunal concluded that neither the penalty under the substantive section 271(1)(c) nor the Explanation could be invoked in this case. The onus on the assessee to show no gross or wilful neglect was found to have been discharged, leading to the cancellation of the penalty. 5. The Tribunal referenced a recent decision regarding the applicability of the Explanation to section 271(1)(c), highlighting the requirement for specific findings by the Income-tax Officer. In this case, the Income-tax Officer did not find the Explanation applicable, and as per the judgment of the Punjab & Haryana High Court, the Explanation could not be invoked. The Tribunal concluded that the penalty was not sustainable on any grounds and hence allowed the appeal of the assessee.
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