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Issues:
1. Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961. 2. Assessment of penalty for deliberate concealment of income. 3. Burden of proof on the assessee to rebut the presumption of deliberate concealment. 4. Consideration of evidence and explanation provided by the assessee in penalty proceedings. Analysis: 1. The case involved the imposition of a penalty under section 271(1)(c) of the Income Tax Act, 1961, on the assessee for alleged concealment of income. The initial penalty of Rs. 19,340 was imposed by the Income-tax Appellate Tribunal, Patna Bench "A," which led to a reference being made to the High Court for opinion on the legality of the penalty. 2. The Tribunal upheld the addition of Rs. 40,000 as the assessee's income from undisclosed sources due to lack of satisfactory evidence regarding certain hundi loans. Subsequently, a penalty was imposed by the Income-tax Appellate Commissioner (IAC) under section 271(1)(c) based on the inflation in expenses and unexplained hundi loans. The Tribunal, however, canceled the penalty citing insufficient evidence and lack of indication of fraud or gross neglect on the part of the assessee. 3. The High Court emphasized the change in law post the insertion of the Explanation to section 271(1)(c), which shifted the burden of proof to the assessee in cases of significant differences between returned and assessed income. The court noted that the assessee failed to provide satisfactory evidence regarding the genuineness of the loans, which was crucial to rebut the presumption of deliberate concealment. 4. The court criticized the Tribunal for not considering the standard of proof required for the assessee to discharge the initial onus under the Explanation. It highlighted the lack of essential details in the explanation provided by the assessee, such as the source and particulars of the hundi loans, which hindered the verification of genuineness by the tax authorities. The court directed the case to be reconsidered by the Tribunal, emphasizing the need for the assessee to present additional evidence to meet the burden of proof. 5. Both judges concurred on remitting the case back to the Tribunal for a reassessment in light of the legal fiction created by the Explanation to section 271(1)(c). They stressed the importance of the Tribunal's evaluation of the explanation offered by the assessee to determine if the initial onus had been discharged, highlighting the significance of the legal presumption regarding deliberate concealment of income. The judges clarified the requirement for the Tribunal to assess the preponderance of probabilities in accepting the assessee's explanation to shift the burden of proof back to the Revenue.
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