Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1975-76 - Assessing Officer, after considering explanations tendered by assessee, levied penalty under section 271(1)(c) by holding that the Explanation to section 271(1)(c) was clearly applicable and assessee had failed to discharge onus under Explanation - Tribunal after recording explanations of assessee held that explanations given by assessee in respect of points raised by Assessing Officer were such that balance of probabilities was in favour of assessee and cancelled penalty - Whether Tribunal was justified in deleting penalty imposed by invoking provision of section 271(1)(c) read with Explanation thereto - Held, yes FACTS During the course of assessment proceedings for the assessment year 1975-76, Assessing Officer raised four points namely (i) the sales price had been shown at a higher rate to the assessee by AN than the sale price charged for sales made of similar commodities to other concerns; (ii) AN could not show purchases of aluminium alleged to have been sold to the assessee; (iii) certain sales to the assessee by AN had not been shown as purchases by the assessee; and (iv) a cheque for Rs. 30,000, though debited by the assessee, was not entered in books of account of AN. The Assessing Officer on the basis of above four points levied penalty under section 271(1)(c), read withExplanation holding that the assessee had failed to discharge onus under Explanation to section 271(1)(c). On appeal, Commissioner (Appeals) confirmed the penalty. The Tribunal had found that the goods sold to the assessee were obtained by AN on approval basis and, hence, were not recorded in its books on the date of sale to the assessee. The Tribunal accepted the, explanation of assessee in relation to higher price charged by AN, that because of insistance about the quality of goods and the option to reject the goods if the quality was found unsatisfactory higher price was charged. In relation to point regarding bearer cheque of Rs. 30,000, the explanation tendered by the assessee that a partner of AN had encashed the cheque and temporarily utilized the funds before…

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