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Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1964-65 - Tribunal held that provisions of section 271(1)(c) were not attracted to assessee firm's case because enhancement made by adopting higher profit rate to assessee's income could not be said to be due to fraud or willful neglect on its part - Whether finding of Tribunal was finding of fact based on relevant consideration and could not be said to be vitiated and, hence, it was justified in cancelling impugned penalty - Held, yes FACTS The assessee was a registered firm. It filed its return for the assessment year 1964-65 and produced accounts in support of the return. The accounts were not found to be properly maintained and were rejected. The income was enhanced from Rs. 21,452 to Rs. 52,621. The IAC imposed upon the assessee a penalty of Rs. 5,000 under section 271(1)(c). The ITAT, however, set aside the penalty order. On reference : HELD Under section 271(1)(c) read with the Explanation, an assessee is liable to penalty for concealment if the income returned by him is less than 80 per cent, of the income assessed unless he proves that the difference in the income returned and in the income assessed is not due to any fraud or gross or willful neglect on his part. In the instant case, the ITAT found that the enhancement in the assessee's income was made because the profit shown by the assessee was only 5 per cent of the sales which was considered by the income-tax authorities to be rather low. On that ground the books were rejected and profit was assessed by applying a rate of 12½ per cent. In the opinion of the Tribunal such a case did not attract the provisions of section 271(1)(c) because the enhancement could not be said to be due to fraud or willful neglect on the part of the assessee. This, was a finding of fact and based, as it was, on relevant considerations could not be said to be vitiated. Moreover, no separate question had been raised challenging the finding of the ITAT on this point. In the circumstances, the question was concluded by a finding of fact recorded by the Tribunal and penalty was rightly cancelled. Note : The case was decided in…

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