1984 (1) TMI 50 - HC - Income Tax

Summary

Issues:
1. Whether the assessee concealed income or furnished inaccurate particulars under section 271(1)(c) of the Income-tax Act.
2. Whether there was fraud or wilful neglect on the part of the assessee.
3. Whether non-acceptance of explanation constitutes wilful neglect or fraud.
4. Whether penal provisions were correctly applied.
5. Whether the imposition of penalty was legal.

Analysis:
The judgment pertains to an application under section 256(2) of the Income-tax Act, 1961, where the assessee sought a direction for the Income-tax Appellate Tribunal to state the case and refer specific questions of law. The primary issue revolved around whether the assessee had concealed income or furnished inaccurate particulars. The case involved the assessment year 1971-72, with the assessee's explanation for certain cash credits being rejected by the Income Tax Officer (ITO), leading to an addition of income from an undisclosed source. The Appellate Tribunal upheld a portion of this addition, prompting the initiation of penalty proceedings under section 271(1)(c) of the Act.

The ITO imposed a penalty based on the assessee's returned income being less than 80% of the income ultimately assessed, invoking the Explanation to section 271(1)(c) for alleged concealment of income. Despite the assessee's claims that the credits were from agricultural income, the Tribunal found the explanation insufficient, attributing wilful neglect or fraud to the assessee. The Tribunal's decision was upheld in subsequent appeals, emphasizing the failure to provide fresh evidence to disprove the presumption of concealment.

The court, after considering the arguments, held that the findings were factual and no legal question arose. Citing precedents, the court highlighted that the rebuttal of the presumption in the Explanation to section 271(1)(c) is a factual determination. The assessee's reliance on certain decisions, including one where the burden of proof was deemed discharged, did not alter the court's conclusion that no legal issue necessitating a reference existed. The court ultimately dismissed the application, affirming that each party would bear its own costs.