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Issues involved: The judgment addresses the correctness of the Appellate Tribunal's decision on the levy of penalty u/s 271(1)(c) and the consideration of specific grounds raised by the Department.
Levy of Penalty u/s 271(1)(c): The assessee admitted to cash credits totaling Rs. 15,000 as income from undisclosed sources during the assessment year 1973-74. The Income-tax Officer initiated penalty proceedings u/s 271(1)(c) based on this addition. The Appellate Assistant Commissioner held that no penalty was warranted as the Income-tax Officer failed to establish that the amount was concealed income. The Tribunal concurred, emphasizing the lack of evidence of concealment by the assessee beyond the agreed addition. Legal Precedents: The Department argued that the mere agreement by the assessee for the addition of undisclosed income justified the penalty u/s 271(1)(c). Citing the decision in CIT v. Krishna and Co., it was contended that such admission by the assessee was adequate proof of concealed income. However, the Tribunal found no additional evidence of concealment beyond the agreed addition, aligning with the principles outlined in legal precedents. Supreme Court Rulings: A Supreme Court case, Sir Shadilal Sugar and General Mills Ltd. v. CIT, highlighted that agreeing to additions to income did not automatically imply concealment. The Court emphasized the need for the Revenue to prove mens rea for a quasi-criminal offense. In the present case, the Tribunal concluded that the Department failed to demonstrate concealment or inaccurate particulars by the assessee, thus ruling out the imposition of penalty u/s 271(1)(c). Conclusion: The High Court upheld the Tribunal's decision, affirming that no penalty was warranted u/s 271(1)(c) as there was no evidence of concealment beyond the agreed addition of undisclosed income. The judgment emphasized the importance of proving mens rea for penalty imposition and dismissed the Department's contentions. The Court answered the questions in favor of the assessee, concluding that no penalty was exigible under the specified section.
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