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TMI Blog1997 (7) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty of Rs.4,40,185 levied under section 271(1)(c) of the Income-tax Act Assessment year 1988-89: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in cancelling the penalty of Rs.4,85,336 levied under section 271(1)(c) of the Income-tax Act?" The assessee is a registered firm carrying on business as a wholesale dealer in engineering cutting tools. For the assessment year 1986-87, originally the return was filed on March 24, 1987, showing an income of Rs.2,21,575. The assessment was completed on November 26, 1987, on a total income of Rs.12,41,700. Subsequently when the assessment for the assessment year 1987-88 was taken up, the Income-tax Officer called for certain details in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal, the assessee contended that there was mistake in the total in the ledger and the mistake when discovered had been made good by the assessee by filing the revised return. There were bona fides on the part of the assessee in producing all the books before the Income-tax Officer and the Department had also accepted the fact that the interest charged under section 215 had been waived. The accountant who was in charge of the accounts died on February 17, 1986, and, therefore the assessee was not in a position to explain how the mistake actually occurred. It was submitted that for the assessment year 1987-88 in which the mistake was actually detected, the penalty proceedings were dropped. Considering all these aspects, the Tribunal was of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar circumstances arose and accepting the explanation offered by the assessee, the penalty proceedings were dropped and therefore for the assessment year 1988-89, penalty is not leviable under section 271(1)(c) of the Act. Accepting the explanation offered by the assessee, the Appellate Tribunal pointed out that there was no evidence to connect the mistake with the partner of the firm and that there was no attempt on the part of the partner to conceal the income, inasmuch as the actual register was produced for verification. According to the it is not possible to fasten the liability on the part of the partner of the firm. The Tribunal also pointed out that it is not possible to consider the addition as a deemed concealment. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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