Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1960-61 - Assessee in revised return showed additional income stating it to be business income - It, however, failed to prove existence of business from which income was earned - ITO assessed said income as income from other sources and levied penalty under section 271(1)(c) - Whether on facts, concealment of particulars of said income could not but be termed as conscious concealment on part of assessee and, as such, penalty was rightly levied - Held, yes FACTS The assessee-firm filed a return showing an income of Rs. 30,673. Later on a revised return was filed showing an additional income of Rs. 25,000 under the head 'business, profession or vocation'. A fresh notice under section 23(2) was issued to the assessee. On receipt of that notice, a partner of the assessee-firm, along with 'S.P.', C.A., appeared and explained to the ITO that the amount of Rs. 25,000 shown in the revised return represented income of the firm from 'some business'. But they failed to prove the existence of that business. The ITO assessed that amount under the head 'other sources'. The ITO also found cash credits in the name wife of some partners and assessed them as income from undisclosed sources and initiated penalty proceedings under section 271 and levied penalty. The appellate authority set aside the finding of the ITO that the sum standing in the names wives of partners was from undisclosed source. The appellate authority held that the explanation given by the assessee with regard to this amount stating that the source of these deposits was savings from past pin money and gifts received by the ladies from time to time was acceptable and, therefore, there was no concealment of income as contemplated under section 271(1)(c) and, as such, no penalty could have been imposed on this course. On writ : HELD Penalty proceedings are penal in character and such proceedings may be said to be quasi-criminal proceedings. Since the character of the proceedings is penal, it is the burden of the department to establish that the assessee is liable to payment of penalty. The department must…

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