Law: Income Tax Act, 1961

Section: 68,271(1)(c)

JUDGMENT H.N. Nagamohan Das, J. - The Income-tax Appellate Tribunal, at the instance of the revenue, has referred the following question of law for our opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the department could not establish the charge of concealment of income in respect of the unexplained cash credits in the books of the assessee and in that view in cancelling the penalty levied under section 271(1)(c) ?" 2. For the assessment year 1993-94, the assessee filed a return of income on 23-12-1993, declaring an income of Rs. 97,920. This return of income was taken up for scrutiny assessment. The Income-tax Officer found from the books of account of the assessee a sum of Rs. 2,01,000 and a notice was issued to the assessee to explain the same. The assessee submitted his reply starting that he has borrowed the sum of Rs. 2,01,000 from different creditors. Since the assessee failed to secure the creditors, he voluntarily offered to treat the same as cash credit. On the basis of the submission of the assessee, the Income-tax Officer passed an assessment order on 3-8-1994, computing the total income of the assessee at Rs. 2,99,500. 3. Subsequently, the Income-tax Officer issued a show-cause notice under section 271(1)(c) of the Income-tax Act, 1961 ('the Act' for short), as to why penalty should not be imposed for the alleged concealment of income by the assessee. The assessee submitted his explanation stating that he voluntarily offered addition of income of Rs. 2,01,000 because of the reason that he failed to produce the evidence of the borrowers. The Income-tax Officer, rejecting the explanation offered by the assessee, passed an order of penalty vide order dated 8-9-1995. The assessee, being aggrieved by the order of penalty, filed an appeal before the Commissioner of Income-tax (Appeals) and the same came to be rejected on 12-7-1995, by confirming the order of penalty passed by the Income-tax Officer. The assessee, being aggrieved by the order of penalty and also the rejection of his appeal by the Commissioner of Income-tax (Appeals), filed an appeal before the Income-tax Appellate Tribunal in…

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