Law: Income Tax Act, 1961

Section: 271,271(1)(c)

[Indian Income-tax Act, 1961].......Section 271(1) (c)-Penalty-Concealment of income-Burden of proof-cash credit surrendered as desired by Income-tax Officer provided penalty would not be imposed-Whether surrender induced y offer of department not to levy penalty- Held yes-Whether penalty leviable-Held no. In the assessment of the assessee-Hindu undivided family for the assessment 1951-52, a sum of Rs.1 lakh was included as undisclosed income, out of which a sum of Rs. 50,000 was made up of cash credits in the names of the two members of the Hindu undivided family in the account books of M/s. Veer Industries Ltd. In the assessment proceedings, the assessee, in a letter dated June 15, 1963, disowned these items, but in another letter dated June, 18. 1963, stated: "The entry of a sum of Rs 50,000 shown as paid on 25th February, 1951, by us in the account of M/s. Veer industries Ltd. is not genuine. However, the amount is surrendered as desired for inclusion in the income of the family for the assessment year 1951-52, provided no penalty is imposed". The Inspecting Assistant Commissioner imposed a penalty of Rs. $5,200. On appeal, the Tribunal reduced the first item of Rs. 50,000 by Rs. 30.000, and in respect of the sum of Rs, 50,000 in the books of M/s. Veer Industries, the Tribunal upheld the inclusion of the amount in the assesseess total income but in the appeal against the penalty it held that the charge of concealment was not proved and set aside the penalty. On a reference at the instance of the Commissioner: Held, that though where an assessee admits a cash credit or a deposit to be his income and surrenders it for assessment to tax, no further onus is left upon the department to prove the charge of concealment, in the instant case the admission of the assessee did not appear to be voluntary or free. It was clear that after the assessee had written the first letter disowning the cash credit, there was a discussion between its representative and the Income-tax Officer, as a result whereof the cash deposits were surrendered for assessment "as desired provided no penalty was imposed". The Income-tax Officer must have induced the assessee to surrender the cash…

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