Law: Income Tax Act, 1961

Section: 256(2),271(1)(c)

Section 271(1)(c), read with section 69, of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1969-70 - Assessee's wife made some investments in reconstruction of house purchased by her - Assessing Officer made additions to assessee's income on account of unexplained investments treating his wife as benamidar - Assessing Officer initiated proceedings under section 271(1)(c) and levied penalty - Whether levy of penalty is discretionary, and since question of applicability of Explanation 1 to section 271(1) had not been agitated before Tribunal, Tribunal was justified in holding that assessee was not liable for imposition of penalty - Held, yes FACTS The assessee's wife purchased a house and made some investments in its reconstruction. The Assessing Officer made additions to income of the assessee on account of unexplained investments on the ground that the wife was a benamidar and, in fact, the investments were made by the assessee. Such additions were confirmed in appeal up to the Tribunal. The Assessing Officer then initiated proceedings and levied penalty under section 271(1)(c). On appeal by the assessee, the AAC cancelled the penalty. On revenue's appeal, the Tribunal upheld the order of the AAC. On reference: HELD The Explanation 1 to section 271(1) was not invoked by the Assessing Officer for levying the penalty. The question as such, therefore, did not arise out of the order of the Tribunal. In any case, the proviso to Explanation 1 could be attracted in case the revenue had placed reliance upon the Explanation. [Para 5] The levy of penalty is discretionary. Therefore, in the circumstances of the case, there was no illegality in the Tribunal's order. The question of applicability of Explanation 1 to section 271(1) having not been agitated before the Tribunal, the Tribunal was justified in holding that the assessee was not liable for imposition of penalty. [Para 7] JUDGMENT 1. In compliance with this Court's order dated July 11, 1978, passed in ITA No. 376 of 1978 under section 256(2) of the Income-tax Act, 1961, the Appellate Tribunal, Allahabad, has referred the following question of law for the opinion of this Court:…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492