Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1976-77 - Assessee filed return of income for relevant assessment year - ITO suspected correctness of said return - Thus, survey of assessee's business was conducted and books of accounts were impounded which revealed several erroneous entries - Ultimately, concealed income was calculated and addition was made to assessee's income - On date of assessment, assessee gave a letter to ITO agreeing to concealed income - Thereupon, ITO imposed penalty under section 271(1)(c) - Assessee contended that he agreed to have assessment made on additional income, and assessment order was result of agreement with revenue, thus, penalty should not have been levied - Tribunal accepted assessee's contention and deleted penalty - On instant reference, it was however seen that there was glaring fact of concealment of income in return filed by assessee - Moreover, it was not possible to infer any agreement by revenue, either in clear term or by necessary implication to act on basis of assessee's letter of agreement - Whether in view of aforesaid circumstances, Tribunal was not right in law in cancelling penalty under section 271(1)(c) - Held, yes FACTS The assessee had filed a return of his income at Rs. 11,310 for the assessment year 1976-77. The ITO suspected the correctness of said return. The assessment order dated 28-3-1979 showed that there was a survey of his business and impounding of the books which recorded several erroneous entries. While the investigation was in progress, the assessee filed revised returns disclosing a total income of around Rs. 3 lacs. The ITO found the books of account not dependable and the income stated in the revised returns. He had before him the details of the assessee's assets and liabilities as on 31-3-1978, and the expenditure incurred by the assessee. From these, ultimately, on a consideration of several factors, the total income for the years 1972-73 to 1977-78 was estimated at Rs. 6 lacs. For the assessment year 1976-77, the income allocated for the period thus arrived at was Rs. 1,44,000. On the date of the assessment, the assessee gave a…

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