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Issues:
1. Imposition of penalty under section 271(1)(c) of the Act for the assessment year 1966-67. 2. Disallowance of claimed expenses related to land purchase. 3. Appeal against the penalty imposition. Analysis: Issue 1: Imposition of penalty under section 271(1)(c) The appeal was against the penalty of Rs. 1,44,075 imposed by the IAC under section 271(1)(c) of the Act for the assessment year 1966-67. The ITO initiated penalty proceedings as the minimum penalty exceeded Rs. 1,000. The IAC imposed the penalty based on the reasons outlined in the order. The assessee contested the penalty before the appellate tribunal. Issue 2: Disallowance of claimed expenses The assessee firm, dealing in land purchase and sale, incurred various expenses, including payments to individuals. The disallowance of expenses included Rs. 80,000, Rs. 15,000, and Rs. 5,500 paid to different parties. The disallowances were based on lack of evidence or discrepancies in the claimed payments. The AAC upheld the disallowance of Rs. 80,000 but accepted the payments made to other parties. The Tribunal also upheld the disallowance of Rs. 80,000 after considering the evidence and witness testimonies. Issue 3: Appeal against penalty imposition The assessee argued that there was no substantial evidence to prove that the payment to one individual was not genuine. Additionally, as the assessee had filed a revised return showing nil income, they contended that there should be no penalty imposed. The assessee claimed a bonafide belief that they had no taxable income. The tribunal upheld the penalty imposition based on the finding that the disputed payment was not genuine. However, the penalty amount was adjusted based on the provisions of the Act as they stood prior to the amendment in 1968. In conclusion, the appeal was partly allowed, with the tribunal upholding the penalty imposition but adjusting the penalty amount based on the pre-amendment provisions of the Act.
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