Law:

Section:

Section 271(1)(c), read with section 260A, of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1996-97 - During scrutiny, Assessing Officer found that certain purchases made by assessee were not admitted either under sales or in closing stock, even though same were entered in purchase ledger - Assessee agreed to addition and assessment was completed accordingly - Assessing Officer, thereafter, imposed penalty under section 271(1)(c) upon assessee - However, first appellate authority and Tribunal found that explanation offered by assessee for non-inclusion of said purchases in closing stock was a reasonable one and there was no intention to conceal income and, accordingly, they cancelled penalty - Whether in view of finding recorded by both appellate authorities, no substantial question of law arose for consideration by Court - Held, yes FACTS The assessee-firm was engaged in the business of dealership in motorcycles, mopeds and spares. During scrutiny, the Assessing Officer found that certain purchases of spares were not admitted either under sales or in the closing stock, even though same were entered in the purchase ledger. The assessee agreed to the addition and the assessment was, accordingly, completed. The Assessing Officer also initiated penalty proceeding under section 271(1)(c). In response to show-cause notice, the assessee explained that said purchases of spares were not included in the inventory by mistake as they were lying in packed condition and as the partners were busy with the construction of a showroom of their sister-concern, the manager of the firm was asked to take stock of the inventory, who committed the mistake of taking into account only the stocks which were loaded on the racks, ignoring the packed items. After considering the assessee's explanation, the Assessing Officer levied a penalty of Rs. 1 lakh on it. On appeal, the Commissioner (Appeals) held that it was not a fit case for levy of penalty and, therefore, penalty imposed was cancelled. On the revenue's appeal, the Tribunal confirmed the order of the first appellate authority. On appeal : HELD The first appellate authority as well as the second…

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