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Issues involved: Imposition of penalty u/s 271(1)(c) of the Income-tax Act, 1961 based on discrepancies in passenger tax stamps purchased by a private limited company engaged in passenger transport business during assessment years 1966-67 and 1968-69.
Summary: The Income-tax Officer added amounts to the assessee's receipts for the years in question due to unaccounted passenger tax stamps, leading to penalty proceedings u/s 271(1)(c). The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal made varying adjustments to the additions. The Inspecting Assistant Commissioner imposed penalties, which were later cancelled by the Tribunal citing the need for stronger evidence in penalty proceedings to prove deliberate concealment of income. The question referred to the court was whether the Tribunal was correct in cancelling the penalties under section 271(1)(c) of the Income-tax Act, 1961. The court referred to the Vishwakarma Industries case, holding that the burden of proof shifts to the assessee when returned income is less than 80% of assessed income, with legal presumptions against the assessee in such cases. As the Explanation to section 271(1)(c) applied in this case, the burden of proof could not be on the Revenue, leading to the conclusion that the Tribunal erred in cancelling the penalties. The court answered the reference in the negative, in favor of the Revenue, directing the Tribunal to reconsider the matter in light of the Vishwakarma Industries case. The reference was disposed of with no order as to costs.
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