Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1959-60 to 1962-63 - Assessee had shown himself as partner in a firm - On basis of material on record, it was opined upto level of Tribunal that it was his proprietory concern and, therefore, entire income of that firm was included in his total income - Penalty proceedings under section 271(1)(c) were initiated for concealment of income - Whether satisfaction of ITO or AAC during course of assessment proceedings regarding concealment of income, etc., was sufficient compliance of statutory provisions and it was not essential that notice to assessee for initiation of penalty should have also been issued during course of assessment proceedings - Held, yes - Whether further, it was not necessary to issue a show cause notice and to hold a preliminary enquiry before initiation of proceedings for imposition of penalty - Held, yes - Whether, having regard to aforesaid, imposition of penalty was to be upheld - Held, yes FACTS The assessee was as individual. He derived income from several source. In the course of assessment proceedings for the assessment years 1959-60 to 1962-63, the ITO was of the opinion that 'KM' was not a genuine partnership but was the sole proprietorship concern of the assessee and the whole of the income from that concerned belonged to the assessee. He accordingly, included income of 'KM' in the total income of the assessee. The order of the ITO was upheld by the AAC and the Tribunal. As the non-disclosure of income from 'KM' was considered by the ITO to represent deliberate concealment, he initiated penalty proceedings under section 271. As the minimum penalty leviable under section 271(1)(c) exceeded Rs. 1,000, the IAC, on receipt of reference from the ITO and after allowing opportunity to the assessee levied penalties for the four years. On appeal before Tribunal, it was contended by the assessee that there had been no valid levy of the penalties because the penalty proceedings had not been commercial in the course of proceedings under the Act. The Tribunal rejected this contention and observed that, as the Income-tax Officer had given…

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