1976 (4) TMI 100 - AT - Income Tax

Summary

Issues:
Levy of penalty under section 271(1)(c) of the IT Act for the assessment year 1970-71 based on a credit entry of Rs. 20,001 in the assessee's account.

Detailed Analysis:

1. Assessment of Income:
The Income Tax Officer (ITO) assessed the credit entry of Rs. 20,001 as income from other sources after rejecting the explanation provided by the assessee regarding the source of the credit. The Assessing Officer also initiated penalty proceedings for concealment of income.

2. Quantum Appeal and Penalty Proceedings:
The Appellate Assistant Commissioner (AAC) confirmed the assessment of Rs. 20,001 under the head "income from other sources" and upheld the penalty imposed by the ITO for concealment of income. The AAC rejected the alternative explanation provided by the assessee regarding the source of the credit.

3. Assessee's Appeal:
The assessee contended that the explanation provided had not been properly appreciated by the authorities. The assessee argued that the credit was from the sale proceeds of a property that was mortgaged earlier, and the amount was utilized along with savings from previous business earnings. The assessee maintained that there was no finding that the sum of Rs. 20,001 represented concealed income.

4. Department's Position:
The Departmental Representative supported the levy of the penalty, arguing that the assessee's explanation was false and that the income was properly assessed under section 68. The Department contended that the rejection of the explanation justified the conclusion of inaccurate particulars of income.

5. Tribunal's Decision:
The Appellate Tribunal held that, based on the facts and circumstances of the case, no penalty could be levied under section 271(1)(c) of the IT Act. The Tribunal found that the rejection of the assessee's explanation was insufficient to prove that the sum of Rs. 20,001 was concealed income. The Tribunal considered the assessee's explanation plausible, especially regarding the mortgage proceeds and previous savings, and concluded that the Revenue failed to demonstrate conclusively that the amount was undisclosed income. Therefore, the Tribunal allowed the appeal and canceled the penalty.

In conclusion, the Appellate Tribunal ruled in favor of the assessee, canceling the penalty imposed under section 271(1)(c) of the IT Act for the assessment year 1970-71, based on the lack of conclusive evidence to establish that the credit entry of Rs. 20,001 represented concealed income.