Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessee disclosed certain amounts in part IV of return and claimed exemption - Assessing Officer considering same as concealed income levied penalty - Assessee went for settlement before Commissioner on condition that amounts disclosed in part IV were not to be considered as an admission or confession in prosecution and/or penalty proceedings - On basis of aforesaid settlement Commissioner quashed penalty - On appeal, Tribunal affirmed commissioner's order - Whether, since except assessee's disclosure in settlement proceedings, there was nothing on record to suggest that amounts offered for taxation really represented assessee's income, penal provisions of section 271(1)(c) could not be applied - Held, yes - Whether, moreover, once assessee had disclosed such amounts in part IV of return, non-acceptance of claim by Department would not bring assessee within purview of section 271(1)(c) - Held, yes - Whether, in such circumstances, assessee was not liable to penalty - Held, yes FACTS In part IV of the income tax return the assessee declared income exempt from tax being receipts by way of agricultural income, marriage chandlas and cross-word prize. In best assessment under section 144, the Assessing Officer made additions of Rs. 7.72 lakhs to income. Subsequently, the penalty proceedings were initiated under section 271 and the IAC imposed penalty of Rs. 8 lakhs. The assessee approached the Commissioner for settlement and agreed to be assessesd on condition that such settlement should not be considered as an admission or confession in the prosecution or penalty proceedings. The Commissioner settled the matter and quashed penalty levied. On appeal the Tribunal held that due to disclosure made by the assessee in part IV of the return, he could not be said to have furnished in accurate particulars of income within the meaning of section 271(1)(c), and consequently, the levy of penalty was not justified. On reference : HELD The purpose of Part IV of the return is to enable the assessee to declare particulars of income claimed to be exempt from tax and which are not included in Part…

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