Law:

Section:

Section 271(1)(c) of the income-tax act, 1961-Penalty-For concealment of income-Assesses was unable to produce creditors to prove genuineness of certain cash credits found by ito in its books-Ito added such peak credits as income from undisclosed sources and assessee did not prefer any appeal against such assessment-Whether assessee could be treated as ha vino admitted concealment of its income and penalty could be imposed on it-Held, on facts, no Facts During the course of the assessment proceedings in respect of the assessment year 1968-69, the ITO noticed certain cash credits in the assessee's books of accounts. The assessee stated that it was not in a position to produce the persons concerned to prove the genuineness of the credits. The ITO worked out the amount of such peak credits and made additions on the basis of these amounts as the assessee's income from undisclosed sources. The assessee did not prefer any appeal against the assessment. This assessment was followed by penalty proceedings under section 271(1)(c). Before the IAC the assessee contended that it was unable to produce evidence to show that these cash credits were genuine, as it was not in a position to call the parties in whose favour the cash credits appeared since it was always heavily indebted und unable to trouble its creditors to give evidence. However, the IAC levied penalty. On appeal, the Tribunal took the view that the assessee had not admitted the concealment of income and that merely because the additions made by the ITO were accepted by the assessee, this did not ipso facto raise an inference that the assessee admitted that it was his concealed income. On reference : Held All that the assessee did was to admit that there were certain cash credits in its books of account in favour of named parties and that the assessee was unable to produce those parties to prove that those cash credits were genuine. The assessee's aforesaid stand could never be considered as an admission by the assessee that it had concealed any income. Even the ITO had not made the addition as concealed income from business but as from undisclosed sources. For these reasons, the penalty levied under section…

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