Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1986-87 Where penalty had been imposed on ground that cash credits recorded in books of account of respondent-assessee were not found explained satisfactorily and, therefore, were added towards income of assessee, but in quantum proceedings, issue relating to addition which was a subject-matter of present proceedings under section 271(1)(c) had since been restored back to file of assessing authority for decision afresh, penalty imposed under section 271(1)(c ) did not survive [In favour of assessee] Penalty had been imposed on the ground that the cash credits recorded in the books of account of the respondent-assessee were not found explained satisfactorily and, therefore, were added towards the income of the assessee. However, in the quantum proceedings, the issue relating to addition which was a subject-matter of the present proceedings under section 271(1)(c) had since been restored back to the file of the assessing authority for decision afresh. Held that on these facts penalty imposed under section 271(1)(c) did not survive. Till such time fresh adjudication could take place, penalty imposed under section 271(1)(c) on the basis of the earlier addition could not be sustained. Note : The Court observed that if the assessment had already become barred by limitation then there being no adjudication on the issue regarding addition of income, concealment could not be treated to have been established. A.N. Mahajan, A. Kumar, B. Agarwal, D. Awasthi, G. Krishna and S. Chopra for the Appellant. JUDGMENT The present appeal filed under section 260A of the Income-tax Act, 1961 (hereinafter referred to as "the Act") has been filed against the order dated July 28, 1999, passed by the Income-tax Appellate Tribunal, New Delhi in respect of the penalty proceedings under section 271(1)(c) of the Act for the assessment year 1986-87. The appeal was admitted vide order dated September 20, 2004 on the following substantial question of law : "Whether, on the facts and circumstances of the case, the Tribunal was legally justified in directing the Assessing Officer to initiate…

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