Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1979-80 - During search conducted at business premises of assessee-firm, certain purchase vouchers were found which were not recorded in regular books of account of assessee - Similarly, certain papers were found which showed that some sales had also not been recorded - ITO took recourse to proviso to section 145 and by applying GP rate of 10 per cent, estimated assessee's income - Income so assessed was more than double than income returned by assessee and, thus, ITO imposed penalty under section 271(1)(c) - Whether since assessed income, which was more than double returned income, was on account of suppression of purchases and concealment of sales on part of assessee, Explanation to section 271(1)(c) was attracted - Held, yes - Whether therefore, penalty levied by Assessing Officer was justified - Held, yes FACTS The assessee-firm was a dealer in medicines. During the search conducted at business premises of assessee, certain purchase vouchers were found which were not recorded in the regular books of account. Similarly, certain papers were found which showed that some sales had also not been recorded. The ITO took recourse to proviso to section 145 and by applying the GP rate of 10 per cent, estimated the assessee's income. Since the assessed income was more than double the income disclosed, the ITO imposed the penalty under section 271(1)(c). On appeal, the Commissioner (Appeals) deleted a part of penalty. On revenue's appeal, the Tribunal upheld the order of the Commissioner (Appeals). On reference : HELD The assessed income was more than double the returned income and, therefore, the Explanation to section 271(1)(c) was attracted. The difference was not on account of any guess work but on the ground that there had been suppression of purchases and concealment of sales. Thus, the assessee was guilty of concealment of income and it had failed to discharge the onus. Therefore, the Tribunal was not justified in upholding the order of the Commissioner (Appeals) deleting a part of the penalty. Note : The case was decided in favour of the revenue. Shambhu Chopra…

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