Law:

Section:

Section 271(1)(c) of the income-tax act, 1961-Penalty-For concealment of income-ITO found in assessee's books debit of Rs. 24,000 representing alleged purchase of nickel from kabari-Assesses failed to prove purchase and, as per assessee's offer, ITO included said amount in taxable income-IAC levied penalty for concealment which was deleted by tribunal-Whether deletion of penalty justified-Held, on facts, yes Facts The assessee-firm manufactured lathe chucks. For the assessment year 1964-65, the ITO found a debit of Rs. 24,000 in the assessee's books on 1-11-1963 towards the purchase of nickel from ordinary kabari. The ITO did not believe the purchase allegedly supported by a kacha stamped receipt voucher and called upon the assessee to produce the supplier. The assessee expressed its inability to prove the purchase conclusively by producing him and, therefore, offered to be assessed to the ITO's best . However, it emphasised the improbability of its trying to turn white money into black money, especially when it was short of funds and, while agreeing to the addition of the said amount in its income, it requested the ITO to take a lenient view. The ITO, accordingly, added the same in the taxable income which was ultimately confirmed by the AAC. Consequently, the IAC imposed a penalty of Rs. 5,000, observing that the assessee's surrender of the amount for addition was not voluntary and this was a fit case for the levy of penalty. On appeal, the Tribunal deleted the impugned penalty on the grounds, infer alia,'( i) that the gross profit rates in the past years ranged between 24 per cent and 25 per cent but the addition of Rs. 24,000, in the present assessment year, raised the rate to 32.5 per cent; (ii) that the ratio of nickel consumption to castings done was broadly the same in comparison with that of earlier years ; (iii) that, though the kabari was not produced, some kacha vouchers were available and, at best, the purchase was not proved but it could not be said that the purchase had been disproved by the department ; and (iv) that there was withdrawal of Rs. 24,000 on the same day for payment against purchase and this amount could not have been withdrawn and…

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