1976 (9) TMI 63 - AT - Income Tax

Summary

Issues:
1. Penalty under section 271(1)(c) for the suppression of sales of imported goods.
2. Applicability of the Explanation to section 271(1)(c).

Detailed Analysis:
1. The appeal challenged a penalty of Rs. 28,000 imposed under section 271(1)(c) for suppressing sales of imported goods. The penalty was based on two issues: the addition of Rs. 25,000 due to sales suppression and the applicability of the Explanation to section 271(1)(c). The assessee argued that the Explanation was not applicable as the returned income was Rs. 7,52,696, and the finally assessed income was Rs. 7,96,438, making 80% of the assessed income less than the returned income. Regarding the sales suppression, the Tribunal confirmed the addition as the assessee failed to provide evidence of goods consumption in the Tools Department. The assessee contended that the inability to prove consumption should not lead to penalty imposition, arguing that the burden of proof lies with the Revenue to establish that the added amount was the assessee's income. Various case laws were cited to support this argument. The Departmental Representative relied on judgments emphasizing the burden of proof on the assessee for penalty imposition.

2. The Tribunal found that while the Rs. 25,000 addition was justified due to lack of explanation or inability to clarify by the assessee, the penalty based solely on this material could not be upheld. It was established that material sufficient for assessment may not be adequate for penalty imposition. The Revenue must prove that the assessee concealed income particulars or provided inaccurate details to impose a penalty. Quoting the Latin maxim "EI OUI AFFIRMAT, NON EI OUI NEGAT, INCUMBIIT PROBTIO" (The burden of proof lies upon him who affirms and not upon him who denies), the Tribunal emphasized that the Revenue cannot solely rely on the assessee's failure to prove their case. Instead, they must disprove the assessee's case with irrefutable evidence. In this case, the Revenue failed to establish that the alleged suppressed sales led to income concealment. Referring to Justice J.C. Shah's words, the Tribunal concluded that the Revenue did not provide the required "some thing more" to justify the penalty. Consequently, the penalty was deemed unwarranted, and it was deleted.

3. Ultimately, the Tribunal allowed the appeal, ruling in favor of the assessee and deleting the penalty of Rs. 28,000 imposed under section 271(1)(c) for the suppression of sales of imported goods.