Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1964-65 - Assessee-firm filed return declaring its income - Certain investigations were started by department - Assessee subsequently, filed petition under section 271(4A) admitting that entries in account books did not reflect real state of affairs but maintained that income returned earlier was correct - Assessment subsequently made at higher income, was agreed to by assessee - IAC imposed penalty on assessee under section 27(1)(c) - Whether there had been concealment of income as well as furnishing of inaccurate particulars thereof by assessee and, therefore, imposition of penalty under section 271(1)(c) on assessee was valid - Held, yes FACTS The assessee-firm filed a return disclosing an income of Rs. 58,574. Certain investigations were started by the department. Subsequently, the assessee filed a petition before the Commissioner under section 271(4A) admitting that the entries in its account books did not show the real state of affairs, but reiterating that the income during the relevant period was the same as shown in the return. The ITO found that the assessee had trafficked in the licences granted to it for importing art-silk yarn at a premium but had made entries in its books of account as if art-silk yarn was imported and used in the manufacture of silk cloth and the silk cloth so manufactured was also sold and estimating the income derived by the assessee by the sale of the licences, determined the total income at Rs. 4,02,279. The action for the levy of penalty under section 271(1)(c) was also initiated for the alleged concealment of income. On appeal, the AAC, reduced the total income to Rs. 1,56,102 and assessee agreed with the same. In relation to the penalty proceedings, the IAC found that the assessee had admitted having cooked up its books to camouflage its transactions and that the assessee had not disclosed the particulars relating to the sale of the licences, viz., the persons to whom the licences were sold, the rates, the manner in which and the persons from whom the foreign exchange was purchased, etc., and, therefore, the assessee had…

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