Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1967-68 and 1968-69 - Assessee filed its return estimating its total income on basis of unclosed accounts, sales and expenses while ITO estimated assessee's income on basis of assessee's wealth in wealth-tax proceedings, resulting in difference between returned income and assessed income - ITO did not accept assessee's estimate as bona fide and levied penalty under section 271(1)(c) - Tribunal cancelled penalty on ground that even assessee's wealth in wealth-tax proceedings was determined by ITO on estimate basis because of which it could not be said that failure to return correct income was on account of any fraud, or any gross or wilful neglect on assessee's part - It also held that assessee rebutted presumption arising under section 271(1)(c) - Whether Tribunal was justified in deleting penalty - Held, yes FACTS For the assessment years 1967-68 and 1968-69, the assessee filed returns declaring total income of Rs. 39,167 and Rs. 27,960 respectively. The ITO assessed the total income at Rs. 63,990 and Rs. 36,000 respectively, and initiated penalty proceedings under section 271(1)(c). The assessee explained that the difference in the returned income and the assessed income was due to the fact that as against the bonafideestimate made on the basis of sales and expenses and unclosed accounts, the ITO had made the estimate on the basis of comparison of wealth of the assessee on the first day of the accounting year with the wealth of the assessee on the last day of the accounting year. The ITO did not accept this explanation on the ground that the department had not accepted the estimates of the assessee made on the same basis right from the assessment year 1965-66 and in spite of knowing this fact, the assessee had not thought it fit to file return showing correct income arrived at by adopting the methods adopted by the ITO. The ITO, accordingly, levied penalty under section 271(1)(c). On appeal, the AAC cancelled the penalty on the ground that the facts being similar to those of assessment years 1964-65 and 1966-67 and the Tribunal having already held that for…

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