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Issues:
- Appeal against penalty under section 271(1)(c) for concealing income. - Disputed additions in the assessment leading to penalty confirmation. - Application of Explanation 1 to section 271(1)(c) pre-1976. - Burden of proof on the assessee to show absence of fraud or neglect. - Legal fiction under Explanation 1 and burden of proof analysis. - Justification for canceling the penalty. Analysis: The appeal was filed against the penalty imposed under section 271(1)(c) for concealing income. The initial return declared a total income of Rs. 1,765, later revised to Rs. 13,543, with the final assessment at Rs. 32,176. The penalty of Rs. 18,280 was based on the difference between the declared and assessed income. The disputed additions included costs of a radiogram, excess pool capital, low household expenses, and excess gold ornaments. The AAC upheld the penalty. The assessee argued that additions were estimated and not proven fraudulent, citing relevant case law. The department contended that the burden lay on the assessee to prove no fraud or neglect, referencing applicable judgments. The Tribunal noted the explanations for each addition, such as withdrawals covering expenses and status justifying gold ornaments. The burden of proof analysis under Explanation 1 pre-1976 was crucial. The Tribunal analyzed the legal fiction of Explanation 1, stating that if the assessee proves no fraud or neglect, the burden is discharged. The preponderance of probabilities favored the assessee's explanations, indicating no guilty intention. The Tribunal found the explanations sufficient to show no fraud or neglect, leading to the cancellation of the penalty. The appeal was allowed, emphasizing the absence of fraudulent intent or neglect in the income declaration process.
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