1981 (4) TMI 139 - AT - Income Tax

Summary

Issues:
1. Penalty imposed under section 271(1)(c)(iii) of the IT Act, 1961 for a cash credit of Rs. 15,000 in the name of Shri Prem Rattan.
2. Applicability of Explanation to section 271(1)(c) in the case.
3. Burden of proof on the assessee to show concealment was not due to fraud or wilful neglect.
4. Evaluation of evidence and justification of penalty imposition by the ITO.

Detailed Analysis:
The judgment involves an appeal by the assessee against a penalty of Rs. 15,000 imposed by the ITO under section 271(1)(c)(iii) of the IT Act, 1961 for a cash credit of Rs. 15,000 in the name of Shri Prem Rattan. The ITO treated the credit as income from undisclosed sources due to the assessee's failure to prove its genuineness. The penalty was confirmed by the AAC, leading to the appeal before the Tribunal (ITAT Jaipur).

The assessee's explanation that Shri Prem Rattan advanced Rs. 5,000 from savings and received Rs. 10,000 from his late father was not accepted by the authorities. Despite Shri Prem Rattan affirming this, the authorities doubted his financial position and the lack of evidence regarding the father's alleged amount. The burden was on the assessee to prove no fraud or wilful neglect under the Explanation to section 271(1)(c).

The Tribunal considered the Punjab & Haryana High Court's decision stating that penalty cannot be imposed if the facts are equally consistent with the amount not representing concealed income. Two hypotheses were presented: one suggesting the assessee introduced concealed income, and the other supporting Shri Prem Rattan's explanation. As there was no positive evidence to prove the assessee's explanation false, the penalty could not be upheld despite the application of the Explanation.

Ultimately, the Tribunal allowed the appeal, emphasizing the lack of concrete evidence to show the assessee's explanation was entirely false. The judgment highlights the importance of positive evidence to justify penalty imposition and the burden on the assessee to demonstrate the absence of fraud or wilful neglect in cases of alleged concealment of income.