Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 [Corresponding to section 28(1)(c) of the Indian Income-tax Act, 1922] - Penalty - For concealment of income - Assessment year 1958-59 - Whether mere estimate made, however, well founded it may be, by itself would not normally constitute material for holding that income that has been added on basis of estimate was income that has been concealed - Held, yes - Whether there must be cogent evidence on basis of which ITO will be able to say that certain amount of income has been concealed - Held, yes - Whether merely on basis of finding that there has been concealment, penalty under section 28(1)(c) of 1922 Act cannot be imposed as it is also necessary to establish quantum of income that has escaped assessment - Held, yes FACTS In the assessment proceedings it was found that the income returned by the assessee did not represent its true income and, therefore, the ITO made an estimate of the income of the assessee. Further, the proceedings were initiated under section 28(1)(c) of the 1922 Act, for the imposition of penalty. The ITO went into the question of concealment and came to the conclusion that there had been concealment of income on the part of the assessee and accordingly, he fixed the penalty to be imposed. The AAC upheld the order of the ITO. The Tribunal after holding that the grounds mentioned by the ITO and the AAC had been established, came to the conclusion that the penalty to be imposed was not 100 per cent only but 30 per cent and accordingly sustained the penalty to that extent. On reference : HELD It is not enough for the purpose of section 28(1)(c) of the 1922 Act to establish that there has been concealment or that the assessee has furnished inaccurate particulars of his income. In order that the amount of the penalty can be determined, it is also necessary to find out the income-tax and super-tax which would have been avoided if the income returned by the assessee had been accepted as the correct income. To find out the income-tax and super-tax that would have been avoided, it was necessary to find out the income that had been concealed and which had not been returned, on the basis of which it was…

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