1991 (6) TMI 16 - HC - Income Tax

Summary

Issues Involved:
1. Justification of the penalty imposed by the Inspecting Assistant Commissioner of Income-tax.
2. Perverse inference by the Tribunal regarding the concealment of Rs. 2,62,000 by the assessee.

Detailed Analysis:

1. Justification of the Penalty Imposed by the Inspecting Assistant Commissioner of Income-tax:
The Tribunal upheld the penalty imposed by the Inspecting Assistant Commissioner under section 271(1)(c) of the Income-tax Act, 1961. The assessee had filed a return showing a net loss, but during assessment, the Income-tax Officer found unexplained cash credits totaling Rs. 2,62,000 and disallowed an interest claim of Rs. 40,404. The Tribunal initially canceled the penalty, stating that the Department failed to prove the sum constituted taxable income. However, the High Court remanded the matter, directing the Tribunal to apply the law effective on the return filing date, as per the Supreme Court's decision in Brij Mohan v. CIT. On remand, the Tribunal concluded that the amounts were concealed by the assessee, justifying the penalty.

2. Perverse Inference by the Tribunal Regarding the Concealment of Rs. 2,62,000:
The Tribunal's inference that the amount of Rs. 2,62,000 was concealed was contested by the assessee. The High Court had directed the Tribunal to reconsider the penalty in light of the law applicable on the return filing date. The Tribunal, after reconsideration, upheld the penalty, stating that the assessee failed to provide evidence to rebut the presumption of concealment under the Explanation to section 271(1)(c). The assessee argued that the Tribunal did not allow sufficient opportunity to present evidence, especially considering some transactions were through cheques. The Tribunal's decision was based on the fact that the assessee did not appear at the penalty hearing and did not discharge the onus of proving no fraud or gross neglect.

Additional Observations:
The High Court noted that the Tribunal took an inordinate time of over five years to take up the matter after the High Court's remand. The assessee's request for more time to produce evidence due to operational difficulties (lock-out and misplaced records) was not adequately addressed by the Tribunal. The High Court emphasized the need for the Tribunal to consider the totality of facts and circumstances and provide a reasonable opportunity for the assessee to present evidence.

Conclusion and Directions:
The High Court declined to answer the questions referred, directing the Tribunal to dispose of the matter afresh. The Tribunal was instructed to consider the facts and circumstances, allowing the assessee to present fresh evidence, and to decide based on the principles laid down by the Supreme Court and other relevant decisions. The Tribunal was directed to complete this within six months from the date of the judgment.

Agreement:
SHYAMAL KUMAR SEN J. concurred with the judgment.

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