Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1970-71 - Addition to income was made on ground that assessee did business outside books of account - Penalty was imposed on basis of said addition - Tribunal on appreciation of material accept explanation of assessee and cancelled penalty - Whether findings recorded by Tribunal while cancelling penalty being a find of fact was binding on High Court - Held, yes - Whether once that finding was accepted, no penalty would be leviable and, therefore, no fault could be found with Tribunal's order - Held, yes FACTS The ITO had found during the course of the assessment proceedings that the assessee had been doing business outside its books and had invested certain amount. As the explanation furnished by the assessee was found to be unsatisfactory, he added that amount to the income of the assessee taking it to be income from undisclosed sources. On quantum appeal, the Tribunal reduced the income assessed by the ITO but substantially upheld the addition which was also affirmed by the High Court. Thereafter, the ITO initiated penalty proceedings and on a reference from him, the IAC imposed a penalty of Rs. 80,000 as against the maximum leviable penalty of Rs. 1,56,150. On appeal, the Tribunal accepted the explanation holding that the version of the assessee rang a note of plausibility and reversed that order. On reference : HELD The Tribunal, on an appreciation of the material, recorded a finding of fact that the version of the assessee rang a note of plausibility. The assessee got the account books of the party produced to show that the goods had been purchased on credit and all payments made after disposing of the same. This explanation was accepted by the Tribunal. The finding recorded by the Tribunal being a finding of fact would be binding on the High Court. Once that finding was accepted, obviously no penalty would be leviable. The explanation offered by the assessee that there was no concealed income had been accepted which meant that the burden placed on the assessee by the Explanation stood discharged. No fault, therefore, could be found with the order of the…

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