- (1.) This is an appeal by the assessee against an order of the CIT (Appeals), confirming a levy of penalty under section 271(1) (c) of the Income Tax Act, 1961, of Rs. 1,95,930.
(2.) The relevant facts are that the assessee is an investment company and its office premises were searched under section 132 of the Act, on 5-9-1985. The search revealed, inter alia, cash of Rs. 11,001 which was seized. The amount was added to the assessees total income in the assessment order under section 69A of the Act. Further, there was a cash credit of Rs. 3 lacs for receiving loans from B. J. Properties & Constructions and this was also added to the assessees total income under section 68 of the Act. The additions were confirmed in appeal by the Tribunal. Thereafter, the Assessing Officer gave opportunity to the assessee in continuation with penalty proceedings initiated under section 271(1) (c) of the Act, along with the assessment order. It was submitted that mere disallowance could not be the basis for the levy of penalty and this was only a case where the assessees explanation had been disbelieved. This could not lead to a reasonable and positive conclusion that the amount represented the assessees income. However, the Assessing Officer did not accept the explanation. He referred to the orders of the CIT (Appeals) and the Tribunal holding that the assessee had failed to discharge the onus of proving the genuineness of the credit of Rs. 3 lacs and, therefore, it amounted to "concealed income of the assessee and, therefore, penalty under section 271(1) (c) should be levied on the amount of Rs. 3 lacs at under section 68".
(3.) A similar explanation was submitted with regard to the addition of Rs. 11,001 saying that the assessees explanation had been disbelieved and this did not invite a penalty for concealment. However, the Assessing Officer observed that "in absence of any satisfactory explanation Rs. 11,001 had been considered income of the assessee and held by the appellate authority. I consider this amount for the purposes of levy of penalty". Thereafter, he calculated minimum penalty on concealed income of Rs. 3,11,001 which came to Rs. 1,95,930 and a penalty was levied accordingly of that amount.;