Law:

Section:

Explanation to section 271(1)(c) [as introduced with effect from 1-4-1964] of the income-tax act, 1961-Penalty-For concealment of income-In assessment proceedings for assessment year 1964-65, of assessee-firm, an addition to its returned income was made, which included certain disallowance of expenses and also an addition of a sum, which represented peak credits of certain hundi loans appearing in books of assessee-ITO observed that assessee had not produced parties or adduced documentary evidence in respect of these hundi loans and, therefore, treated this amount as assessee's income from undisclosed sources-Above-mentioned addition was upheld by aac as well as by tribunal-Thereafter, in penalty proceeding, iac observed that before assessing authorities assessee produced no satisfactory evidence to prove genuineness of deposits, and hence, in absence of any corroborative evidence, genuineness of deposits could not be accepted and, therefore, he imposed penalty under section 271(1)(c) on charge of concealment of income-Assessee contended that loans were taken by cheques but gave no further information-Tribunal found that it was not clear as to on what material penalty was imposed-It further found that there was no indication of fraud or gross neglect on part of assessee-Therefore, tribunal held that penalty could not be imposed merely because in assessment proceeding assessee did not come forward with a satisfactory explanation to establish genuineness of claims-Consequently, in that view of matter, tribunal cancelled order of iac imposing penalty-Whether onus placed on assessee under explanation to section 271(1)(c) was discharged and whether tribunal was justified in cancelling penalty order-Held, on facts, no Facts In the assessment proceedings for the assessment year 1964-65, of the assessee-firm, an addition to its returned income was made, which included certain disallowance of expenses and also an addition of an amount which represented the peak credits of certain hundi loans appearing in the books of the assessee. The ITO observed that the assessee had not produced the parties or adduced any documentary evidence in respect of these hundi loans and,…

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