Law:

Section:

Section 271(1)(c) , read with section 256 of the Income-tax Act, 1961 - Penalty - For concealment of income - Question referred to High Court was as to whether Explanation to section 271(1)(c) was attracted to facts of case - High Court answered question in affirmative - However, contained a sentence that "imposition of penalty by the Inspecting Assistant Commissioner was, therefore, justified" - Assessee sought to delete said sentence - Whether High Court has inherent jurisdiction to correct errors and omissions arising from accidental slip - Held, yes - Whether since sentence in question had crept in due to an accidental slip or omission or carelessness, it was required to be deleted - Held, yes FACTS For the assessment year 1963-64 the question referred to the High Court for decision was "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the Explanation to section 271(1)(c) of the Income-tax Act, 1961, was not applicable to this case.?" The High Court answered the question holding that Explanation to section 271(1)(c) was directly attracted. A paragraph of the , inter alia, read as "The Explanation to section 271(1)(c) was thus directly attracted. This means that it must be presumed that the assessee had furnished inaccurate particulars of his income, unless he established that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. The act of furnishing inaccurate particulars had taken place after the amendments were introduced in the section. Imposition of penalty by the Inspecting Assistant Commissioner was, therefore, justified". The assessee filed petition under section 256 praying to delete the sentence occurring in aforesaid para of the , namely: 'Imposition of penalty by the Inspecting Assistant Commissioner was therefore, justified' or to clarify that the court had not intended by the said statement to justify the imposition of penalty even if the Explanation applied and that it was open to the Tribunal to consider the appeal, regarding the substainability of the imposition of penalty under the Explanation. HELD The High…

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