Law:

Section:

Section 271(1)(c) read with section 41 of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1968-69 - Assessee-firm deposited amount received as insurance compensation with a bank in India and same was later withdrawn by its partners in ratio of their shares - Neither its receipt not is disbursement was shown in books of account of assessee - After completing assessment, ITO issued notice under section 148 to bring said sum to income of assessee and also imposed penalty under section 271(1)(c) on assessee - Whether since conduct of assessee as a whole indicated that he intended to conceal income and furnish inaccurate particulars thereof, penalty under section 271(1)(c) was rightly imposed on assessee - Held, yes FACTS On 22-5-1967, the assessee-firm received insurance compensation. The assessee deposited this amount with his bankers. This amount was later on withdrawn by the partners in the ratio of their shares. However, this withdrawal was not entered in the books of account. As a result, the ITO, while assessing the assessee's income for the assessment year 1968-69 could not know of this income and bring it to assessment. On getting information, the ITO issued a notice under section 148 on 31-12-1969. The assessee then filed his return disclosing the factum of receipt of amount from insurance company. In the course of hearing under section 143, the assessee agreed to the inclusion of Rs. 19,257. However, the ITO brought the entire amount of Rs. 28,680 to tax. Thereafter, the assessee was subjected to penalty under section 271(1). The AAC upheld the penalty order. On further appeal, the Tribunal observed that, the conduct of the assessee was contumacious with the sole intention to conceal the income or furnish inaccurate particulars thereof. The Tribunal was, therefore, of the view that the penalty was exigible. The fact that he had been assessed under section 41(1), which was a deeming provision, could not help the assessee because his conduct had been such that it displayed a concerted effort which was well planned to conceal the income or to furnish the inaccurate particulars thereof. On appeal : HELD The question whether…

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