Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1965-66 and 1966-67 - For relevant assessment years, assessee had not disclosed in return any income apart from salary - In pursuance of notice under section 148, Assessee filed another return in which he showed certain amount as professional income - ITO having collected figures from various Government Departments made certain additions to assessee's income - IAC held assessee liable for penalty under section 271(1)(c) - On appeal, Tribunal did not accept tax assessed in assessment proceedings as basis for purpose of penalty and recomputed income for determining quantum of penalty - Whether in view of provision of clause (iii) of section 271 (1)(c), Tribunal went beyond its jurisdiction in reopening assessment in penalty proceedings for purpose of determining quantum of penalty payable by assessee - Held, yes FACTS For the relevant assessment years, the assessee had not disclosed in the return any income apart from salary. A notice under section 148 was issued and the assessee. The assessee filed the return in pursuance of the said notice. The assessee showed in that return a sum of Rs. 2,000 as professional income. The ITO collected figures from various Government departments to find out how much had been received by the assessee as consultation and other charges. The total of these figures was Rs. 6,969. The ITO assessed the professional income at Rs. 9,000. Similarly, for the assessment year 1966-67, the ITO estimated the professional income at Rs. 8,100 and assessed the total income at Rs. 10,848. The IAC held the assessee liable for penalty under section 271(1)(c) for both, the years and levied the penalty. On appeal, the Tribunal recomputed the income which in its opinion ought to have been assessed in each year for determining the quantum of penalty and it did not accept the tax assessed in assessment proceedings as the basis for purposes of penalty. The Tribunal, thus, reduced the penalty for both the years under consideration. On reference: HELD A reading of clause (iii) of section 271(1)(c) will show that the penalty which can be levied under…

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