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Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1968-69 - ITO assessed assessee on higher income than returned by making additions on account of income-tax, wealth-tax etc. - IAC taking view that assessee was guilty of gross negligence in not making addition to his income of items mentioned above, levied penalty under section 271(1)(c) - Tribunal, however, taking note of fact that said items were exhibited in profit and loss account held that it was case of inadvertent omission and, accordingly, deleted penalty - Whether, on facts, deletion of penalty was justified - Held, yes FACTS The ITO assessed the assessee on higher income than returned by making additions on account of household expenses, salary, income-tax, wealth-tax etc. The ITO referred the case to the IAC under section 274(2). The IAC levied penalty under the Explanation to section 271(1)(c) as the income returned was less than 80 per cent of the income assessed under section 143. The IAC was of the view that the assessee was guilty of gross negligence in not making additions to his income of the items mentioned above. The Tribunal, however, took into consideration the fact that the items, referred to above, were exhibited in the profit and loss account, a copy of which was submitted along with the return. As all these items were mentioned in the profit and loss account, it took the view that the assessee had no intention to hoodwink the revenue and that it was a pure case of inadvertent omission. The Tribunal, accordingly, deleted the penalty. On reference : HELD On facts, the Tribunal could take either of the views, namely, that the omission was deliberate and also that it was not, because no explanation of the assessee was called for as to in what circumstances he omitted to add back the amounts which were mentioned in the profit and loss account and were, in fact, added back by the ITO. The IAC took the view that there was gross negligence and willful default whereas the Tribunal had taken quite a contrary view. As a matter of fact, about the two additions, namely, wealth-tax and income-tax, even the counsel present in court were ignorant…

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