Law:

Section:

Section 271(1)(c) read with section 275 of the Income-tax Act, 1961 and section 23 of the Indian Income-tax Act, 1922 - Penalty - For concealment of income - Assessment years 1959-60 to 1962-63 - Assessee was initially assessed under section 23 of 1922 Act- Subsequently, Assessing Officer found that assessee had income from business of a firm and same was not disclosed or included for assessment years 1959-60 and for remaining three assessment years assessee had only disclosed 20 per cent of his shares of profit of said firm - Assessing officer accordingly reopened assessments for said assessment years and made reassessments - While reassessment proceedings for assessment year 1961-62 was initiated under section 23 of the Act 1922 but for other assessment years reassessment was initiated under Act 1961 - Thereafter penalty under section 271(1)(c) was imposed on assessee - Whether so far as assessment years 1959-60, 1960-61 and 1962-63 were concerned proceedings were properly commenced during pendency of main assessment proceedings and requirements of section 271 read with section 275 were satisfied - Held, yes - Whether, however, as far as assessment year 1961-62 was concerned, in view of decision of CIT v. Hiralal Mohanlal Shah [1968] 69 ITR 312 , impugned penalty was invalid - Held, yes FACTS The assessee was initially assessed under section 23 of the Indian Income-tax Act, 1922. However, the ITO subsequently found that the income from the business, which was carried on in the name of 'K' firm was not included in the returns filed by the assessee; nor had the assessee shown any connection or interest with the said business so far as the assessment year 1959-60 was concerned. For the remaining three years, 1960-61, 1961-62 and 1962-63, the assessee had only disclosed 20 per cent as his share of the profit of the said 'K' firm. The ITO was of the opinion that the alleged firm was not a genuine partnership but was the sole proprietary concern of the assessee and the whole of the income from the alleged firm belonged to the assessee. Thereafter, the ITO reopened the assessment for the years 1959-60 and 1960-61 and so far as the assessment year 1961-62 was…

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