Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1975-76 - Assessee-company was ordered to be wound up and an official liquidator was appointed under Companies Act, 1956 - Upon notice under section 148, official liquidator submitted a return of income - Assessing Officer made an addition in respect of value of finished goods removed in clandestine manner and not accounted for in books of account maintained by company and also imposed penalty under section 271(1)(c) - Whether since revenue authorities did not dispute fact that clandestine removal of goods, if any, was done by or at behest of erstwhile management of company-in-liquidation, it was not open to Assessing Officer to impose penalty for concealment and/or furnishing inaccurate particulars of income by resorting to Explanation to section 271(1)(c), on Official Liquidator - Held, yes FACTS The assessee-company was ordered to be wound-up and an Official Liquidator was appointed under the Companies Act, 1956. A notice under section 148 was served on the Official Liquidator. The Official Liquidator submitted a return of income accompanied by a note stating that he was not competent to sign and verify the return of income of the company-in-liquidation. The Assessing Officer completed the assessment and made an addition in respect of value of finished goods removed in a clandestine manner and not accounted for in the books of account maintained by the company. The Assessing Officer also imposed penalty under section 271(1)(c). On appeal, the Commissioner (Appeals) dismissed the same. On further appeal, the Tribunal held that while filing the return of income of the assessee-company in liquidation, that Official Liquidator, who was an officer of the Court and was a 'public servant' acted in a bona fide manner and in good faith, which necessarily implied the absence of any fraud, gross or wilful negligence and, therefore, there was no justification in sustaining the penalty levied under section 271(1)(c) on the basis of such return of income. On reference : HELD The revenue authorities did not dispute the fact that clandestine removal of goods, if any, was…

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