Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1959-60 to 1961-62 - Whether finding arrived at by Tribunal in assessment proceedings cannot be regarded as conclusive for purposes of penalty proceedings as authorities are expected to consider afresh all materials available, either produced at assessment stage or later, in penalty proceedings in light of burden to prove, resting on revenue, whether assessee had consciously concealed particulars of his income - Held, yes - Whether, therefore, where Tribunal, in penalty proceedings, based its conclusion merely on basis of finding given in assessment appeals, its order imposing penalty was to be set aside - Held, yes FACTS In the relevant assessment years, the assessee, a contractor had undertaken contracts for the construction of certain works. He claimed that out of the total receipts in connection with those contracts, he was entitled to 2 per cent of the receipts by way of profits as he had assigned those contracts to sub-contractors. The ITO rejected the assessee's claim. On appeal, the AAC upheld the order of the ITO. On further appeal, the Tribunal took into consideration that the assessee was an experienced contractor, that the assessee had parted with the entire work in favour of the sub-contractors, and that the alleged sub-contractors were not proved to be experienced contractors, and came to the conclusion that the assessee had tried to understate his taxable income by setting up the case of sub-contracts, which was not true. In the meanwhile the ITO had also initiated penalty proceedings against the assessee for having concealed his income and the matter was referred to the IAC for disposal. The IAC concluded that the assessee had concealed his income in the relevant assessment years and accordingly, imposed the penalty under section 271(1)(c). On appeal, the Tribunal held that in view of its findings in assessment appeals, the assessee was guilty of having concealed his income by setting up the story of sub-contracts. Accordingly the provisions of section 271(1)(c) were attracted. On reference : HELD The finding arrived at by the Tribunal in the…

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