1983 (1) TMI 80 - HC - Income Tax

Summary

Issues:
Whether the Tribunal was justified in deleting the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961.

Analysis:
The case involved a reference under s. 256(2) of the Income Tax Act, 1961 regarding the deletion of a penalty of Rs. 36,540 imposed under section 271(1)(c) of the Act. The Income Tax Officer (ITO) added a sum of Rs. 20,000 to the assessee's income as income from undisclosed sources due to lack of evidence supporting the genuineness of cash credits. The Income-tax Appellate Tribunal (Tribunal) set aside the penalty imposed by the Income-tax Appellate Commissioner (IAC), leading to the reference before the High Court. The key issue was whether the assessee had discharged the initial burden placed on it regarding the penalty under section 271(1)(c) of the Act.

The Department argued that the assessee failed to contest the cash credits before the AAC, leading to the penalty imposition by the IAC. However, the Tribunal noted that this alone did not prove concealment or furnishing inaccurate particulars of income by the assessee. The Tribunal emphasized that the Department must present cogent material or evidence indicating conscious concealment or deliberate furnishing of inaccurate particulars by the assessee. The Court concurred with the Tribunal's view that the mere failure to challenge the addition of cash credits did not necessarily imply fraud or wilful neglect on the part of the assessee.

The Court referred to previous judgments emphasizing that the burden shifts to the Department to prove fraud or wilful neglect once the assessee discharges the initial onus. In this case, the IAC did not reject the written explanation submitted by the assessee, leading the Tribunal to conclude that the initial burden was discharged. The Court held that the Tribunal rightly deleted the penalty based on the facts and circumstances of the case. Consequently, the Court answered the reference question in the affirmative, affirming the Tribunal's decision to delete the penalty under section 271(1)(c) of the Act. No costs were awarded in this matter.