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Issues:
1. Jurisdiction of the ITO to impose penalty under section 271(1)(c) based on old law. 2. Computation of penalty based on income sought to be evaded. 3. Justification of maximum penalty imposed by the AAC. Analysis: 1. The appeal was filed against the AAC's order upholding a penalty of Rs. 5,000 imposed by the ITO under section 271(1)(c) of the Income Tax Act. The ITO reopened the assessment after discovering undeclared income from the share of a firm and another source, resulting in a reassessment with a higher total income. The assessee argued that the penalty was imposed using old law provisions before April 1, 1976, and cited relevant case law supporting the computation of penalties based on income sought to be evaded. The AAC agreed with the assessee, reducing the penalty to Rs. 5,000 based on the income sought to be evaded. 2. The assessee further appealed, contending that the AAC unjustly imposed the maximum penalty. The assessee explained that the original return was filed based on the previous year's income sources, despite informing the lawyer of the new sources for the current year. The Departmental Representative argued that the assessee intentionally concealed income, justifying the maximum penalty. The Tribunal considered the concealment of income from the two sources and the lack of evidence regarding the lawyer's instructions. It concluded that the assessee attempted to defraud the Revenue by excluding the incomes, upholding the maximum penalty imposed by the AAC. 3. The Tribunal upheld the AAC's decision, emphasizing the undisputed concealment of income by the assessee and the lack of evidence showing the lawyer was instructed to include the concealed incomes. The Tribunal found that the assessee's actions indicated an intent to defraud the Revenue, justifying the maximum penalty. Consequently, the appeal was dismissed, affirming the imposition of the Rs. 5,000 penalty.
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