Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - During search it was found that assessee had declared income of Rs. 40,000 from liquor business - Assessing Officer, after verifying seized books of account, adopted income of Rs. 3,45,643 - Assessee initially raised objections but subsequently withdrew objection and agreed for adoption of Rs. 3,45,643 and requested that no penalty be levied - Assessing Officer rejecting assessee's request levied penalty under section 271(1)(c) - Whether, on facts, penalty was rightly levied by Assessing Officer - Held, yes FACTS During search it was found that the assessee had declared income of Rs. 40,000 from the liquor business. The Assessing Officer, after verifying the seized books of account, adopted the income of Rs. 3,45,643 and asked for objections from the assessee. The assessee filed objections but subsequently withdrew various objections and agreed for the adoption of Rs. 3,45,643 as income from liquor business and further requested that no penalty be levied. However, the Assessing Officer imposed penalty under section 271(1)(c). On appeal, the Commissioner (Appeals) confirmed the penalty. On second appeal, the Tribunal set aside the imposition of penalty. On appeal : HELD It could not be said that the assessing authority had accepted the explanation given by the assessee. True, the assessee had made a request to drop the penalty but that was not accepted by the assessing authority. Going by the letter of the assessee, it was clear that the assessee had conceded concealment of income. Imposition of penalty is not dependent upon consent or otherwise of the assessee. Penalty proceedings are penal in nature. Penalty can be imposed once concealment of income is noticed and unearthed. [Para 7] The Assessing Officer had proceeded on the basis of the materials unearthed during the search. Reply given by the assessee would clearly show that there was no objection regarding the estimation of the assessment made by the Assessing Officer. The only request was to make some adjustment and to waive the penalty which was not acceptable to the Assessing Officer. Therefore, the Tribunal had…

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