Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 [Corresponding to section 28(1)(c) of the Indian Income-tax Act, 1922] - Penalty - For concealment of income - Assessment years 1952-53 and 1953-54 -Whether revenue must prove that additions made to income because of rejection of explanation of assessee represent assessee's income and there must be facts leading to reasonable and undisputable conclusion that such amounts as added to income of assessee are its income - Held, yes - Whether where apart from falsity of explanation of assessee in assessment proceedings and inference drawn from its failure, there was no other material to show that amounts in question represented income of assessee which it had concealed or had deliberately furnished inaccurate particulars thereof, penalty under section 28(1)(c) of 1922 Act could not be imposed - Held, yes FACTS In the returns submitted after the reopening of the original assessments, the assessee disclosed certain amount for the relevant assessment years in Part D of the return claiming that those amounts were not liable to be included in the assessments. The assessee's plea was that the assessee's branches collected amounts for charity in the bills and that these amounts remained with the branches, that in some of the cases the amounts of charity were not disclosed in the accounts while in others these amounts were entered in the account books. The assessee's further explanation was that these collections for charity were not spent by the branches and were later on transferred to the head office and that as these amounts were in the nature of a trust with the assessee, these did not form part of the assessee's income. The ITO found that the assessee failed to produce evidence to show that the branches had collected these amounts on the bills as charity, that certain amount received from the branches did not appear in the account books of the assessee, that the assessee failed to explain why these amounts were not spent for charity and why the amounts standing on account of charity was distributed amongst the partners according to their shares. The ITO thus, treated the amount as the income of the assessee from…

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