Law: Income Tax Act, 1961

Section: 256(2),271(1)(c),143

Section 271(1)(c), read with section 69A, of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessee-firm carried on business of jewellery - In course of raid, IAC levied penalty on assessee and made two additions under section 271(1)(c), one for unaccounted stock of precious stones and other of Rs. 19,000 for discrepancy in closing stock - ITO rejected assessee's explanation regarding addition of Rs. 19,000 and imposed penalty - Tribunal held that addition was rightly made under section 69A for difference in closing stock but cancelled penalty levied - Whether Tribunal was justified in cancelling penalty under section 271(1)(c) to extent it was levied by reference to addition of Rs. 19,000 made in assessment - Held, no CASES REFERRED TO CIT v. Anwar Ali [1970] 76 ITR 696 (SC), CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14/30 Taxman 546H (SC), CIT v. Jewels Paradise [1975]101 ITR 265 (Kar.) Chuharmal v. CIT [1988] 172 ITR 250/ 38 Taxman 190 (SC) Addl.CIT v. Jeevan Lal Sah [1994] 205 ITR 244/ 73 Taxman 182(SC). JUDGMENT S.B. Sinha, CJ. - At the instance of the revenue, the Tribunal, Delhi Bench 'C', has sent the statement of the case to this Court for its opinion in terms of section 256(2) of the Income-tax Act, 1961, on the following question : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty under section 271(1)(c) of the Income-tax Act, 1961 to the extent it was levied by reference to the addition of Rs. 19,000 made in the assessment ?" 2. The facts of the matter, as noticed by the learned Tribunal, are as follows : The assessee was a registered firm carrying on the business of jewellery. The firm consisted of two partners, namely, Smt. Nand Rani Khanna and her son, Shri Ramesh Chand Khanna. The penalty for a sum of Rs. 18,419 was levied upon the assessee by the IAC. Two additions of Rs. 18,419 for unaccounted stock of precious stones and of Rs. 19,000 for the discre-pancy in the closing stock under section 271(1)(c) of the Act as per its books of account, which were seized in the course of a raid, were made. As regards addition of Rs. 19,000, the explanation of the…

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