Law: Income Tax Act, 1961

Section: 271

Income-tax----Penalty---Concealment of income ---Assessees purchasing grape garden with funds of firm of which they were partners---Sale deed showing assessees individually as vendees---Grape garden not, shown as an asset of firm---In books of grape garden accounts, assessees credited with profits of grape garden as agricultural income---Income from grape garden boosted up to give it colour of agricultural income, so that no tax would be leviable under Income-tax Act---Tribunal cancelling penalty on ground that concealment of income was by firm and not by assessees---Grape garden belonged to co¬ownership of assessees and there was no firm---Tribunal not justified in cancelling penalty---Indian Income Tax Act, 1961, S.271(1)(c). The assessees purchased a grape garden with the funds obtained from a firm of which they were partners. The sale deed mentioned the assessees individually as vendees and the grape garden was not shown as an asset of the firm. In the books of the grape garden the account of each of the assessees was credited with the profits of the grape garden divided equally between them. The assessments of the assessee-partners were reopened on the ground that iii the original assessments, the assessments were made without noticing the income from the grape garden and each of the assessees was additionally assessed at an amount of Rs.57,790 which came to be reduced to Rs.43,350 before the appellate authority. Thereafter, penalty proceedings under section 271(1)(c) of Income Tax Act, 1961. were initiated by the Inspecting Assistant Commissioner against the assessee which resulted in the imposition. of a penalty amounting to Rs.50,000, on each of the assessee¬ partners. The Tribunal cancelled the imposition of penalty on the ground that the concealment of income was by the firm and not by the partners, rejecting the contention of the Revenue that, the assessees were not partners but only co-ownens. When this question originally came up before the High Court, the matter was remanded to the Tribunal. The Tribunal, on remand, had held that the income from the grape garden represented the actual income of. the assessees and the assessees had given the colour…

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