Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1970-71 - In Part IV of return, assessee claimed exemption in respect of prize money in cross-word puzzle - ITO held that prize money was assesee's income from undisclosed sources and referred matter to IAC - IAC found that there was collusion between assessee and organizers of cross-word puzzle who by camouflage concealed income as prize - Whether disclosure of prize money received in Part IV of return of income could not be considered as a true and full disclosure within meaning of section 271(1)(c) - Held, yes - Whether, therefore, levy of penalty was justified - Held, yes FACTS In Part IV of the return, the assessee had claimed certain amount as cross-word puzzle price of casual nature. The ITO held that the said amount was income from undisclosed sources. Similarly, the amounts of the commission paid in connection with the said prize and the amount allegedly earned on the investment of the said prize were also included in the assessee's total income. The ITO referred the matter to the IAC for penalty proceedings. The IAC held that the case attracted the provisions of section 271(1)(c) and levied a penalty on the assessee. From the evidence on record, he held that the assessee had not received any genuine prize and the receipt was in the nature of concealed income not accounted for and that, by claiming it to be a genuine prize, there was an attempt to furnish inaccurate particulars of income as well. He found that there was collusion between the assessee and the organizers of the cross-word puzzle competition, who organized the fraud and they had colluded in a fraudulent manner with the assessee who, by camouflage, concealed the income as a prize. On appeal, the Tribunal cancelled the penalty. On reference : HELD The Tribunal was not right in law in holding that due to disclosure made by the assessee in Part IV of the return, she could not be said to have furnished inaccurate particulars of income within the meaning of section 271(1)(c) and that, consequently, levy of penalty under the said provisions was not justified. It was clear that the disclosure of…

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