Law: Income Tax Act, 1961

Section: 256,271(1)(c)

Income-tax--- ----Penalty---Concealment of income---Cash credits-- for assessment year 1963-64 return filed in 1968---Cash credits added as income and penalty levied---Explanation to S.A (1)(c) applicable---Levy of penalty valid---Indian Income Tax Act, 1961, S. 271(1)(c), Explanation. In the reassessment proceedings initiated by the Income-tax Officer, credits in the accounts of two of the partners were treated as unexplained income of the assessee. Penalty proceedings were also initiated. On a reference: Held, that for the assessment year 1963-64, the return was filed in 1968 in response to notice issued in 1968 and, therefore, the Explanation to section 271(1)(c) of the Income Tax Act, 1961, was applicable. The Tribunal was not justified in concealing the penalty levied under section 271(1)(c) of the Act. CIT (Addl.) v. Jeevan Lal Shah (1994) 205 ITR 244 (SC) and CIT v. Anwar Ali (1970) 76 ITR 696 (SC) ref. JUDGMENT K. SHIVASHANKAR BRAT, J.---In respect of the assessment year 1968-69, the following questions have been referred under section 256 of the Income Tax Act, 1961, for our consideration: "(1) Whether, on the, facts and in the circumstances of the case, the Tribunal was legally correct in cancelling the penalty of Rs.13,000 levied under section 271(1)(c) of the Income Tax Act, 1961? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the principle laid down by the Supreme Court in the case of CIT v. Anwar Ali (1970) 76 ITR 696 was applicable in the instant case particularly when the return of income was filed after insertion of the Explanation to section 271(1) which came into force on April 1, 1961?" Instead of narrating the facts, the relevant part of the order of the Appellate Tribunal could be read: "The assessee is an individual and the assessment relates to the assessment year 1963-64, the relevant previous year of which ended on March 31, 1963. The assessee was deriving income from Kirana business and commission, besides he claimed he was a partner in an unregistered firm called Thakur Dass Manobar Lal. It appears, the assessment on the assessee was originally completed on a total income of…

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