2004 (12) TMI 69 - HC - Income Tax

Penalty for concealment of income applicant had not produced 6R vouchers on the ground that it has been lost and misplaced and he wanted to take the benefit/advantage of the fact that the said vouchers had been produced before the sales tax authorities who have accepted his books of account - It was incumbent upon the applicant to produce 6R vouchers before the income-tax authorities as well if he wanted to show that he had not concealed the particulars of his turnover - Aapplicant had failed to discharge the onus which lay upon him under the Explanation to section 271(1)(c) penalty is leviable

Summary

Issues Involved:
1. Justification of penalty for concealment of income.
2. Applicability of Explanation to Section 271(1)(c) of the Income-tax Act, 1961.
3. Relevance of non-production of 6R vouchers before income-tax authorities.
4. Impact of previous judicial decisions on penalty imposition under Section 271(1)(c).

Detailed Analysis:

1. Justification of Penalty for Concealment of Income:
The Tribunal held that the penalty for concealment of income was justified due to the applicant's failure to produce 6R vouchers, which rendered purchases unverifiable. The Tribunal emphasized that the applicant did not provide further evidence to counter the findings, thus failing to discharge the onus under the Explanation to Section 271(1)(c) of the Act. The Tribunal's decision was based on the fact that the applicant's income returned was less than 80% of the assessed income, invoking the presumption of concealment.

2. Applicability of Explanation to Section 271(1)(c) of the Income-tax Act, 1961:
The court noted that the Explanation to Section 271(1)(c) was applicable as the returned income was less than 80% of the assessed income. The applicant failed to produce material to discharge the onus of proving that the failure to return the correct income did not arise from fraud or gross or wilful neglect. The court referenced several Supreme Court judgments, including CIT v. Mussadilal Ram Bharose and K.P. Madhusudhanan v. CIT, which reinforced that the burden of proof lies on the assessee under the Explanation to Section 271(1)(c).

3. Relevance of Non-Production of 6R Vouchers Before Income-Tax Authorities:
The applicant argued that the non-production of 6R vouchers, which were accepted by sales tax authorities, should not lead to an adverse inference. However, the Tribunal and the court found that the applicant's failure to produce these vouchers before income-tax authorities justified the imposition of penalty. The court highlighted that the applicant did not provide any evidence to substantiate the claim that the vouchers were misplaced, thus failing to rebut the presumption of concealment.

4. Impact of Previous Judicial Decisions on Penalty Imposition Under Section 271(1)(c):
The applicant cited several cases, including CIT v. Net Ram Ram Swamp and CIT v. Harnam Singh & Co., arguing that the mere non-production of vouchers should not lead to penalty imposition. However, the court distinguished these cases, noting that they either predated the 1964 amendment to Section 271(1)(c) or did not consider the Explanation's effect. The court emphasized that the Explanation shifts the burden to the assessee to prove the absence of fraud or neglect, which the applicant failed to do.

Conclusion:
The court concluded that the applicant failed to discharge the onus under the Explanation to Section 271(1)(c) and upheld the Tribunal's decision to impose a penalty for concealment of income. The question referred was answered in the affirmative, in favor of the Revenue and against the assessee. There was no order as to costs.