Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 [Corresponding to section 28(1)(c) of Indian Income-tax Act, 1922] - Penalty - For concealment of income - Assessment year 1955-56 - Whether even after order in assessment proceedings regarding addition to income from undisclosed sources had been upheld, entire onus in penalty proceedings still lay on department to prove that assessee had concealed particulars of his income - Held, yes - Whether evidence regarding failure on part of assessee to explain source of disputed receipt was not sufficient to uphold imposition of penalty on assessee under section 28(1)(c) of 1922 Act - Held, yes FACTS The assessee had invested certain amount for construction of house and explained that the said sum was received by way of loans. The ITO found that none of the creditors could have been in a position to advance amounts. Though the creditors admitted having advanced the moneys to the assessee, they, however, did not produce any books of account to support the advances claimed to have been made by them as loans. Therefore, the ITO did not accept the explanation of the assessee or the evidence of the creditors and treated the said amount as the assessee's income from undisclosed sources. The ITO also levied penalty under section 28(1)(c) of the 1922 Act. The AAC upheld imposition of the penalty. On further appeal, the Tribunal held that only because the explanation was not found satisfactory the amount was presumed to be the assessee's income and when the amount was not proved to be the assessee's income there was no question of the assessee having concealed particulars of his income and there could be no justification for imposition of penalty under section 28(1)(c) of the 1922 Act. On reference : HELD The Tribunal had held and found as a fact that the department had not found any materials to hold that the amount represented the assessee's income. This finding of fact had not been challenged in any of the questions raised on behalf of the revenue. In the instant case whatever evidence had been produced and considered by either side was at the assessment stage before the ITO and thereafter no evidence had been produced on either…

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