Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 – Penalty – For concealment of income – Assessment year 1959-60 – Assessee agreed to addition of amount representing hundi loans as its business income and assessment was completed on that footing – IAC subsequently levied penalty under section 271(1)(c) by rejecting assessee's contention that there was no definite material on record to prove concealment – Whether once assessee agreed to accept amount as his income from business, it would be sufficient for department to seek to discharge onus in penalty proceedings by relying upon this admission, and at that stage onus would shift to assessee to show that admission made by him was incorrect as matter of fact or it was wrongly or illegally made or that it was made for reason which would suggest that it was not really his concealed income- Held, yes – Whether since it was not shown that any such second opportunity was seriously availed of by assessee or that it had sought for but was denied this opportunity, penalty was rightly imposed on assessee under section 271(1)(c) – Held, yes FACTS In the course of assessment proceedings for the relevant assessment year, the ITO discovered certain hundi loans in the account books of the assessee-firm which, according to him, represented concealed income. The assessee-firm agreed to the addition of the said sum as its business income, and the assessment was completed on that footing. The penalty proceedings under section 271(1)(c) were subsequently initiated. The assessee contended that no penalty could be levied because there was an agreement between the assessee-firm and the Income-tax Officer that no penalty would be levied if the assessee-firm immediately accepted the addition of the amount and also contended that there was no definite material brought on record to show that the assessee-firm had actually concealed the particulars of its income. The IAC rejected the contentions of the assessee, and levied the penalty under section 271(1)(c). On appeal, the Tribunal upheld the IAC's orders. On reference: HELD Whether a revised return is filed or an admission is made before the Income-tax Officer in the course of original…

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