Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1971-72 - In course of assessment proceedings, ITO found that assessee had spent Rs. 1.75 lakhs towards cost of construction of building - He concluded that said amount would be assessable in assessee's hand over a number of years of which a sum of Rs. 20,000 was assessable during relevant assessment year and, accordingly, made an addition of that amount - Assessee agreed to addition so made by ITO - Thereupon, IAC, on basis of aforesaid addition, levied penalty under section 271(1)(c) - On appeal, Tribunal, however, held that it was not clear that investment of Rs. 20,000 in construction of property had been made out of undisclosed income of assessee assessable to tax for relevant assessment year, and, therefore, no penalty was leviable - It was seen from records that besides addition of Rs. 20 thousand made in assessment proceedings, there was no other material in penalty proceedings to justify levy of penalty on ground of concealment - Whether in aforesaid circumstances, order passed by Tribunal deleting penalty was correct and no question of law arose out of said order - Held, yes FACTS The assessee filed the return of income for the relevant assessment year, declaring his total income at rupees nil. In the course of investigation, the assessee was found to be the owner of a building. The assessee's contention that the building belonged to the HUF consisting of the assessee and his brother was accepted. It was also accepted that his contribution towards the cost of construction of the building over a number of years was Rs. 1,75,000. The ITO concluded that said amount of Rs. 1,75,000 would be assessable in the assessee's hands over a number of years of which a sum of Rs. 20,000 was assessable during the relevant assessment year. The assessment was completed by adding the aforesaid amount of Rs. 20,000 on agreed basis. The ITO initiated the penalty proceedings under section 271(1)(c) and referred the matter to the IAC. The IAC found the assessee guilty of concealment of income and accordingly, levied penalty on him. On appeal, the Tribunal held, that it was…

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