Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - for concealment of income - Assessment year 1964-65 - Assessee in his books of account showed certain amount borrowed from one 'M' - ITO being not satisfied asked 'M' to appear with account books - 'M' did not do so - Besides, it was discovered that 'M' had made statements in two independent tax cases that he was not carrying on business of money lending, but was merely lending his name as creditor on payment of commission - An addition of aforesaid amount was this made to assessee's income and penalty was levied under section 271(1)(c) - Tribunal upheld levy of penalty - On instant reference, it was seen that ITO tried to ascertain from all available sources whether amount in question was income of assessee or not - He examined so called creditor and even made effort to obtain books which were deliberately withheld - Whether, in aforesaid circumstances, assessee's contention that there was no material on record on basis of which revenue authorities could come to conclusion that there was concealment of income, was to be rejected - Held, yes - Whether, therefore, penalty was rightly imposed - Held, yes FACTS The assessee in his books of accounts had shown that two amounts of Rs. 20,000 and Rs. 25,000 had been borrowed by him on 7-4-1964, and 10-4-1964, respectively, from one 'M'. The ITO being not satisfied asked 'M' to appear with his account books. But he did not do so. His plea was that the account books had been lost. It was discovered that 'M' had only returned an income of Rs. 4,000 odd during the assessment years 1961-62, 1962-63 and 1963-64, and not declared any income from money-lending business. In addition to this, two statements were made by 'M' in two independent income-tax cases wherein he had stated that he was not carrying on the business of money-lending, but was merely lending his name as a creditor on payment of 3 per cent. Commission. The ITO concluded that amounts in question were bogus entries and, thus, made addition of the amounts. Subsequently, the penalty was imposed under section 271()(c) by the IAC. The assessee's appeal against imposition of penalty was dismissed by the…

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