Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1961-62 - Whether a penalty order cannot be solely based on reasons given in original order of assessment - Held, yes - Whether, however, without merely proceeding on basis of findings given at stage of assessment, if materials on record point to conclusion that disputed amount represented income and that assessee had deliberately concealed particulars of same, levy of penalty can be justified - Held, yes - Assessee, engaged in manufacture and sale of handloom goods, showed in its return purchase of certain handloom goods which was not supported by independent vouchers - Assessee, in order to buy peace with department, subjected itself to assessment on value of goods so purchased - Revenue authorities having made additions to assessee's income, also levied penalty under section 271(1)(c) - On instant reference, it was seen that payment to weavers in respect of aforesaid purchase had not been proved by production of receipts - Moreover, Tribunal had recorded finding that assessee itself did not want examination of weavers from whom goods were alleged to have been purchased - Whether in aforesaid circumstances, it could not be said that Tribunal had based its decision upholding penalty order merely on basis of rejection of assessee's explanation regarding alleged credit purchases, rather, it was based on concrete and positive materials - Held, yes - Whether, consequently, order levying penalty under section 271(1)(c) was valid in law - Held, yes FACTS In the return filed by the assessee-firm, engaged in manufacture and sale of handloom goods, the gross profit worked out to less than that in the preceding year. In a thari register maintained to record issue of yarn and art silk to weavers, the assessee had also shown purchase of certain handloom goods on the last day of the accounting year, which was not supported by independent vouchers. The assessee having expressed its inability to produce those weavers, and in order to buy peace with the department, subjected itself to assessment on the value of the goods so purchased. The ITO made addition accordingly. On…

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