Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1973-74 - Department having come to know that assessee had constructed a house, a notice under section 139(2) was issued - In response to that notice assessee filed a return declaring nil income - Later, assessee being confronted to explain source of investment in construction, assessee filed a revised return declaring certain amount as income from other sources - ITO, partly accepted source of investment in construction declared by assessee and treated balance as income and imposed penalty thereon - Whether since concealment had already been detected by ITO at time when return declaring nil income was filed, no benefit could be derived from mere fact that assessee had filed revised return declaring certain income - Held, yes - Whether since assessee failed to prove that there was no fraud or any gross or wilful neglect on her part and concealment was not deliberate, penalty had been rightly imposed - Held, yes FACTS Pursuant to a survey conducted by the department, it was revealed that the assessee had constructed a house. On the basis of the said report, the ITO served a notice under sections 139(2) and 133. In response to that notice, the assessee filed her return of income declaring nilincome. Thereafter, being asked by the ITO, the assessee furnished the details of investment in the construction of the house and also filed a revised return declaring certain amount as income from other sources. However, the ITO to certain extent accepted the source of investment declared by the assessee in construction of the house and treated the balance as income of the assessee. Consequently, the ITO initiated penalty proceedings under section 271(1)(c). The ITO after obtaining approval of the IAC imposed penalty on the assessee. The penalty was upheld by the Commissioner (Appeals). The Tribunal also upheld the order levying penalty but reduced it to a certain extent. On reference : HELD It was not the case of the assessee that the penalty under section 271(1)(c ) had been imposed by the ITO on the directions/dictates of the IAC and he had not applied his independent…

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