Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - In consequence of information that assessee maintained two sets of account to avoid disclosure of true income, ITO reopened assessment to reassess escaped income - On appeal tribunal confirmed finding of ITO but recomputed income on estimate basis - Penalty under section 271(1)(c) was imposed on assessee - On appeal against imposition of penalty tribunal concluded since income recomputed on estimate basis, no concrete figure of concealment for which mens rea could be attributed could be established and as such no penalty could be imposed under section 271(1)(c) as it stood prior to 1-4-1964 - Whether tribunal justified - Held, on facts, no - Whether tribunal was justified in holding that the onus which lay on the assessee in terms of explanation to section 271(1)(c) stood discharged because income was estimated on optimum receipt basis - Held, no FACTS For the assessment years 1950-51 to 1953-54 the original assessments of the assessee, running a transport business, were completed by the ITO. In the year 1957 the assessee got a case registered under section 408 of the Indian Penal Code, 1860 against its certain employees for defalcation of the assessee's funds. During the trial of that criminal case, the accused produced four diaries relating to the assessee's account for the years 1950-51 to 1953-54 to prove that the assessee was maintaining two sets of account to avoid disclosure of true income to the Income-tax Department and the ones produced in the Court were the secret account of the assessee which showed much higher income for the four years. On receipt of the information from the criminal Court, the ITO reopened the assessment proceedings under section 34(1)(a) of the Indian Income-tax Act, 1922, and reassessed the income. On appeal, the Tribunal confirmed the finding of the ITO that the assessee had been maintaining two sets of accounts. It also confirmed the findings of the ITO that the four diaries produced in the criminal court belonged to the assessee and that substantial income had been concealed by the assessee which had not been shown in the returns. However,…

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