9911796707
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Issues:
1. Imposition of penalty under section 271(1)(c) of the IT Act, 1961. 2. Interpretation of penalty imposition under the provisions of the Act of 1961 for assessments completed under the Act of 1922. 3. Consideration of merits of the case in penalty imposition. 4. Application of the Supreme Court ruling in the case of Anwar Ali to penalty imposition based on disbelieved explanation without cogent evidence. Detailed Analysis: 1. The appeal pertains to the imposition of a penalty under section 271(1)(c) of the IT Act, 1961. The assessee, a registered firm, initially reported an income of Rs. 17,289 for the assessment year 1961-62. However, the final assessment determined a total income of Rs. 1,04,107, including various additions like disallowed expenditure, trading account adjustments, and cash credits treated as income from undisclosed sources. The penalty was imposed based on the addition of Rs. 4,500, which was later reduced from Rs. 8,500, by the Income-tax Appellate Tribunal (ITAT). 2. The Calcutta 'A' Bench of the Tribunal initially canceled the penalty, citing a preliminary objection by the assessee that penalty imposition could not be done under the Act of 1961 for assessments completed under the Act of 1922. However, upon reference to the High Court at Gauhati, the High Court held that penalties under the 1961 Act could indeed be levied for assessments concluded under the 1922 Act, contrary to the Tribunal's initial decision. 3. Subsequently, an application was filed by the assessee requesting a hearing on the merits of the case, as the Tribunal had not previously addressed the substantive issues. Despite delays and missing files, the matter was revisited by the Tribunal to consider both the procedural and substantive aspects of the case. 4. In the final judgment, the Tribunal acknowledged the binding nature of the High Court's decision on the procedural aspect but delved into the merits of the case. It was noted that the penalty was solely based on the disallowed cash credits of Rs. 4,500, which the assessee claimed were loans supported by a confirmation letter. Relying on the precedent set by the Supreme Court in the case of Anwar Ali, the Tribunal emphasized that a penalty cannot be imposed solely on the basis of disbelieving the assessee's explanation without additional concrete evidence of concealed income. As there was a lack of such evidence in this case, the Tribunal concluded that the penalty imposition was unwarranted, despite upholding the initiation of proceedings under the 1961 Act for the 1961-62 assessment concluded under the 1922 Act. 5. Ultimately, the Tribunal allowed the appeal, canceling the penalty imposed on the assessee based on the lack of substantial evidence supporting the addition of cash credits as concealed income, in line with the principles established by the Supreme Court.
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