Law:

Section:

Section 271(1)(c) of Income-tax Act, 1961 – Penalty – For concealment of income – Assessment year 1964-65 – Assessee, in addition to voluntary disclosure of certain sum, was found to have advanced another sum to parties outside account – ITO considered that out of above sums a specified sum was referable to assessment year 1964-65 – He not only brought to tax said sum but also levied penalty of an equal sum – Tribunal held that what was brought to tax could not be referred to any particular assessment year and there was no evidence to show that said sum added could be related to relevant assessment year – It accordingly cancelled penalty – Whether in penalty proceedings independent evidence is necessary to show concealment which involves existence of an income and existence of income has to be established by some positive evidence - Held, yes – Whether Tribunal having pointed out that there was no evidence to show any concealment of any amount in relevant assessment year, addition made by ITO only on basis of best judgment assessment would not by itself supply evidence of concealment - Held, yes – Whether, therefore, order passed by Tribunal cancelling penalty was correct - Held, yes FACTS The assessee made a voluntary disclosure as per the Finance Act, 1965. Besides, the ITO found another sum as having been advanced to parties outside the account. The ITO after completing the assessments for the assessment years 1962-63 and 1963-64, held that out of the above two sums, a sum of Rs. 72,220 was referable to the assessment year 1964-65. The said sum was included in the assessment, and the IAC levied a penalty of an equal sum. The Tribunal, on appeal, found that what was brought, to tax, together with the outstanding as on 1-7-1963, disclosed under the Finance Act of 1965, could not be referred to the earning of any particular year. There being no evidence to show that said sum of Rs. 72,220 added by the ITO could be related to the assessment year 1964-65, it held that no penalty was leviable. On reference : HELD In penalty proceedings independent evidence is necessary to show the concealment. The Tribunal had pointed out that there was no evidence to show any…

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