Law:

Section:

Section 271 (1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1998-99 - For relevant assessment year, assessee had filed return of income declaring capital gain on sale of shares - Assessing Officer processed said return under section 143(1)(a) - Subsequently, Assessing Officer, on basis of information received from revenue authorities that sale of shares on which capital gain had been declared by assessee in original return was bogus, issued notice under section 148 to assessee - In response to said notice, assessee filed revised return surrendering entire amount of sale proceeds of shares allegedly in order to buy peace of mind and to avoid hazards of litigation and also to save himself from any penal action - Assessing Officer framed assessment on basis of revised return and also imposed penalty under section 271(1)(c) upon assessee holding that he had filed revised return after detection of concealment of income by department and since he had intentionally played fraud to avoid higher rate of tax, he was guilty in terms of section 271(1)(c) - Whether since Assessing Officer had simply rested his conclusion on act of assessee of having offered additional income in revised return and had failed to take any objection that declaration of income made by assessee in his revised return and his explanation were not bona fide, penalty imposed upon assessee was not justified and had rightly been set aside by appellate authorities - Held, yes FACTS For the relevant assessment year, the assessee had filed the return declaring certain income which included long-term capital gain on sale of shares. The return was processed under section 143(1)(a). Subsequently, the Assessing Officer, on the basis of an information received from the Deputy Director of Income-tax (Investigation) that the sale of shares, on which capital gain had been declared by the assessee in the original return was indeed bogus, issued a notice under section 148 to the assessee. In response to the said notice, the assessee filed the revised return of income surrendering the entire amount of sale proceeds of the shares. The Assessing Officer framed assessment on…

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