Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1961-62 - For relevant assessment year, assessee filed his return showing that he had withdrawn only Rs. 2000 on account of household expenses - ITO estimated said expenses at Rs. 500 per month and at that rate added Rs. 4,000 to assessee's income - This addition was confirmed by AAC and Tribunal - Thereupon, penalty proceedings were initiated and IAC imposed penalty under section 271(1)(c) read with section 274(2) - Tribunal upheld imposition of penalty - Whether in view of fact that assessee was an industrialist whose firm's annual turnover was running into crores of rupees, ITO had estimated his household expenses on ridiculously low side - Held, yes - Whether, therefore, it could be concluded that assessee had deliberately furnished inaccurate particulars of income in order to conceal his income - Held, yes - Whether, in such circumstances, penalty was rightly imposed on assessee - Held, yes FACTS For the relevant assessment year, the assessee filed its return of income declaring income of R.s 86,029. During the relevant accounting year, the assessee had withdrawn Rs. 2000 on account of household expenses. The ITO estimated that the expenses of the assessee must have been at the rate of Rs. 500 per month and at that rate he must have spent Rs. 6,000 during the accounting year. Thus, the difference of Rs. 4,000 was added in his income for the purpose of assessment. This addition was confirmed by the AAC and also by the Tribunal. The penalty proceedings were initiated at the time of completing the assessment, and the IAC imposed penalty under section 271(1)(c), read with section 274(2). On appeal, the Tribunal upheld the imposition of penalty. On reference : HELD In these days of high prices, even an ordinary man cannot live on Rs. 2,000 a year. Even the total emoluments of a class IV employee comes to about Rs. 3,000 per annum and here was an industrialist whose firm's annual turnover, though runs in crores of rupees, yet he wanted the revenue to believe that he only spent Rs. 2000 on his household. Rather, the ITO had estimated his house-hold expenses at…

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