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2007] 294 ITR 481 [2007] 159 TAXMAN 26 (PUNJ. & HAR.) HIGH COURT OF PUNJAB AND HARYANA Commissioner of Income-tax, Patiala* v. Suraj Bhan ADARSH KUMAR GOEL AND RAJESH BINDAL, JJ. IT REFERENCE NOS. 98 AND 99 OF 1987 APRIL 19, 2006 Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1969-70 and 1970-71 - Whether when an assessee files a revised return showing higher income and gives an explanation that he offered higher income to buy peace of mind and avoid litigation, penalty cannot be imposed merely on account of higher income having been subsequently declared - Held, yes CASE REFERRED TO CIT v. Suresh Chandra Mittal [2001] 251 ITR 9/ 119 Taxman 433 (SC) [Para 6]. Dr. N.L. Sharda for the Applicant. ORDER 1. Following question of law has been referred for our opinion by the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 31-12-1976 passed in ITA Nos. 263 and 264 of 1975-76, in respect of assessment years 1969-70 and 1970-71:- "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the penalty of Rs. 25,515 and Rs. 45,680 imposed by the Inspecting Assistant Commissioner of Income-tax under section 271(1)(c) of the Income-tax Act, 1961 for assessment years 1969-70 and 1970-71 respectively?" 2. The assessee is a wine contractor. He derives income from property, personal business and share income. He filed his return of income declaring loss of Rs. 8,410. In the balance sheet, cash balance and personal capital were shown as Rs. 3,090 and Rs. 29,341 for the assessment year 1969-70. For the assessment year 1970-71, return of income was filed declaring the income at Rs. 11,451, while in balance sheet, cash and credit balance in the capital account were shown as Rs. 2,248 and Rs. 43,963. A search took place in the premises of the assessee on 28-11-1970 and certain books of account were seized, apart from cash amounting to Rs. 33,000. The assessee revised his balance sheet, raised cash balance, revised other entries and thereafter filed revised returns with the department. 3. Proceedings were initiated under section 271(1)(c)…

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