Law:

Section:

Explanation to section 271(1)(c ), of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1959-60 - Original assessment of assessee-firm was completed oh 12-8-1960 - Subsequently assessment was reopened to consider assessment of certain spurious hundi credits - In course of reassessment proceedings and subsequently, even during penalty proceedings before IAC, assessee merely asked for adjournments and did not offer any explanation as to genuineness of aforesaid hundi credits - Whether assessee having failed to discharge presumption of concealment, by virtue of applicability of Explanation to section 271(1)(c) it was liable for penalty - Held, yes - Whether even though original assessment was made under 1922 Act, reassessment having been completed under 1961 Act, penalty proceedings could be initiated and levied under section 271(1)(c) of the 1961 Act-Held, yes Facts For the assessment year 1959-60, the assessment of the assessee-firm was completed on 12-8-1960. Subsequently, the assessment was reopened under section 147(a) to consider the assessment of certain spurious hundi loans. A revised return was filed by the assessee, showing the income as originally assessed. In the course of the assessment proceedings, since the assessee did not substantiate the genuineness of the hundi credits, despite a number of opportunities given, the ITO treated the amount of aforesaid hundi credits as income from undisclosed sources and also disallowed interest relating to that and completed the assessment on 29-2-1972. The Tribunal upheld the addition of aforesaid credits as well as the disallowance of interest. In the course of penalty proceedings, numerous opportunities were given to the assessee, but the assessee merely asked for adjournments and did not offer any explanation as to the genuineness of the aforesaid hundi credits. The IAC, in view of the Explanation to section 271(1)(c), imposed penalty. On appeal, the Tribunal held that the concealment was referable only to the original return filed by the assessee on 11-5-1959 and, therefore, section 28(1)(c) of the Indian Income-tax Act would be applicable and further that the filing of a…

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