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1. Appeal against penalty under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1977-78. Comprehensive Analysis: The case involved an appeal against the levy of a penalty under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1977-78. The assessee, a wholesale ration dealer and lorry owner, had income discrepancies in the cash book totaling Rs. 5,50,000 and an additional amount of Rs. 58,444 credited without proper explanation. The Income-tax Officer initiated penalty proceedings under section 271(1)(c) and levied a penalty of Rs. 3,88,860. The assessee contended before the CIT (Appeals) that the penalty should be limited to a smaller sum based on peak credits. However, the CIT (Appeals) upheld the penalty citing Explanation 1 to section 271(1)(c) deeming any addition as concealed income. The CIT (Appeals) rejected the assessee's contention on peak credits and upheld the penalty. The assessee appealed further. The Appellate Tribunal considered the submissions and evidence. The assessee had agreed to the additions made by the Income-tax Officer, as evidenced by letters submitted, where explanations were provided for the discrepancies. The Tribunal noted the assessee's cooperation during assessment and his agreement to the additions without appealing against them. Referring to the Supreme Court decision in Sir Shadilal Sugar & General Mills Ltd. v. CIT [1987] 168 ITR 7051, the Tribunal found that penalty was not justifiable in this case. The Tribunal emphasized that penalty is leviable only if there is no explanation or if the explanation is false or unsubstantiated. In this case, the explanation provided by the assessee regarding the discrepancies was not proven false, and the peak credit statements supported the explanation. The Tribunal also highlighted that the revenue's difficulties in reassessment were due to the assessee's agreement for assessment without penalty proceedings. Therefore, the Tribunal concluded that no penalty should be levied on an agreed assessment and canceled the penalty. In conclusion, the Appellate Tribunal allowed the appeal, canceling the penalty levied under section 271(1)(c) for the assessment year 1977-78.
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