Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1963-64 to 1965-66 - Assessee, running an engineering college used to collect monies from students for arranging for their overseas training and employment - On scrutiny of account, ITO found that balance amount that remained after incurring expenses was not returned to persons concerned - ITO, thus, on basis of assessee's admission, made addition to her income and also initiated penalty proceedings - On appeal before Tribunal, assessee contended that she was in position of trustee of students from whom money was collected and as such money in her hands was not liable to be treated as income - Tribunal accepting assessee's explanation cancelled penalty - On instant reference it was seen that assessee all along had been in bona fide belief that surplus amount was refundable - However, during year in question she happened to make admission under misconception of facts and circumstances - Whether, in aforesaid circumstances, it could be said that admission was wrong and it was on department to prove positively that there was concealment of income - Held, yes - Whether, since revenue failed to bring any such material on record to hold that income was concealed, Tribunal was correct in cancelling penalty - Held, yes FACTS The assessee, running an aeronautical engineering college used to collect monies from students of the college for arranging for their overseas traning and employment. On a scrutiny of the account the ITO found that though the assessee had collected the aforesaid amounts by way of deposits, she had not returned the balance that remained after incurring the expenses in respect of the persons concerned. The ITO therefore made additions of the deposits in income of the assessee. Penalty was imposed on the basis of the additions. On appeal before the Tribunal, the assessee's case was that she was in the position of a trustee of the students from whom the money had been collected, and as such money in her hands was not liable to be treated as income. The revenue on the other hand, pointed out that the assessee herself had agreed to the inclusion of…

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