Law:

Section:

Section 271(1)(c) of the income-tax Act, 1961 Penalty For concealment of income Assessment year 1959-60 Assessee admitted to have made out of books profit and agreed to its inclusion in his assessable income Penalty imposed by IAC under section 271(1)(c) for such concealment deleted by tribunal Whether tribunal justified in law Held, on facts, no Facts The assessee carried on the business of purchase and sale of cycle and motor parts, etc., under the name and style of RC as well as LC. For the assessment year 1959-60, the assessee showed the income from RC and LC at Rs. 3,022 and Rs. nil,respectively, though the profit and loss account of LC showed a profit of Rs. 248. In the course of assessment proceedings, the ITO found that the assessee had derived profit from the sale of 4,791 imported sets of cycle parts, which had not been recorded in his account books. The ITO, accordingly, added in the taxable income the estimated profit of Rs. 19,164 and determined the total income at Rs. 55,248, by his order dated 29-10-1963. He also initiated penalty proceedings under section 271(1)(c). On appeal, the AAC reduced the secreted profit to Rs. 18,328 which was confirmed by the Tribunal. The IAC eventually imposed under section 271(1)(c) a penalty of Rs. 9,700 on the concealed income of Rs. 32,969 including the said concealed income. The Tribunal deleted the penalty observing (i) that the onus lay wholly upon the department to prove that the assessee had actually made profits higher than what he had disclosed ; and (ii) that a mere estimate of the possible higher profit could not be treated as proof of concealment of income. On reference under section 256(2) : Held Where the assessee himself had admitted that the impugned unrecorded profit in respect of sale of imported cycle parts represented his concealed income and had agreed to its inclusion in his income, no further evidence would be neccessary to show that it was the amount which represented his income or that it represented his concealed income. The Tribunal was, thus, not justified in holding that the department had not discharged the onus of proving that the assessee had concealed the profits on the sale of sets…

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