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TMI Blog1973 (4) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... Cases Nos. 145 and 146 of 1972 reads : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that non-maintenance of quantitative details and proper accounts by the assessee would not be tantamount to gross or wilful neglect and the resultant under-statement of the income by the assessee will not amount to concealment within the meaning of the Explanation to section 271(1)(c) ? " The question which has been raised in D. B. Income-tax Case No. 147 of 1972 is: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that non-maintenance of proper accounts by the assessee would not be tantamount to gross or wilful neglect and the resultant under-statement of the income by the assessee will not amount to concealment within the meaning of the Explanation to section 271(1)(c) ? " It is agreed by the learned counsel that despite difference of phraseology employed in the three questions framed in the above six cases they raise substantially the same question dependent on the interpretation of the Explanation to section 271(1)(c). We agree and accordingly we are disposing of the applications by one order. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed from individuals are sold either in the same condition or after re-manufacturing them. For the assessment year 1968-69 the assessee filed a return of Rs. 21,289. The Income-tax Officer found that the assessee was not maintaining proper accounts and, therefore, assessed its income at Rs. 34,800, applying the gross profit rate at 6.25 per cent. on the estimated sale. The Income-tax Officer in the course of assessment proceedings initiated penal proceedings under section 271(1)(c) of the Act but as the minimum penalty exceeded Rs. 1,000, he referred the matter to the Inspecting Assistant Commissioner under section 274(2) of the Act. The Inspecting Assistant Commissioner, Jaipur Range I, by his order dated September 28, 1970, imposed a penalty of Rs. 13,600, under section 271(1)(c) for concealment of income. The assessee appealed and the Tribunal by its order dated September 21, 1971, accepted the appeal and quashed the penalty observing: " As regards the other appeal concerning penalty, we find that the assessed income was Rs. 34,800 as against the declared income of Rs. 21,289. All this was on an estimate basis in trading result. This could not essentially involve conscious conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es be enough to sustain the imposition of penalty specially when the addition is not too high. Such proceedings are of quasi-criminal in nature, and something more was required to show that the assessee consciously concealed the particulars of income or furnished inaccurate return. In our view negligence in the maintenance of proper accounts is not synonymous with the concealment of income as envisaged by section 271(1)(c). It is correct that the Explanation mentioned in this section as incorporated on April 1, 1964, placed the onus of proving that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on the part of the assessee, but the same again cannot be treated at par with the negligence in the maintenance of accounts. We are, therefore, unable to categorically hold that there was conscious concealment of income by the assessee which could justify the levy of penalty. " In D. B. Income-tax Case No. 147 of 1972, the assessee is a registered firm which mostly deals in precious stones For the assessment year 1967-68, the assessee filed a return showing its total income at Rs. 91,900. On scrutiny the Income-tax Officer found that the qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the declared income, would not alone justify the levy of penalty. " The department made applications under section 256(1) of the Act to the Tribunal to refer the questions of law which it claimed arose in these six cases. The Tribunal by its consolidated order dated 24th February, 1972 rejected all the six application of the department. The Tribunal noticed the Explanation added to section 271 of the Act with effect from April 1, 1964, and observed by reference to Sree Meenakshi Mills Ltd. v. Commissioner of Income-tax I that " when the finding is one of fact, the fact that it is itself an inference from the other basic facts will not alter its character as one of fact ". The learned Members of the Tribunal by reference to Basant Lal Om Prakash v. Commissioner of Income-tax held that the imposition of penalty had to be found on the material on record and it is essentially a question of fact whether in a certain case penalty is called for or not. The Tribunal also relied on Commissioner of Income-tax v. Sankar Sons & Co. which explained the purpose of the Explanation in section 271 of the Act. The Tribunal particularly noticed that emphasis laid by the Kerala High Court that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the lack of the supporting data such as of stock register, the income was assessed on a basis of estimate and having regard to this circumstance the learned Members of the Tribunal held that no case of wilful or gross neglect was found against the assessee. The allegation of fraud finds no mention in the order of the Inspecting Assistant Commissioner and, therefore, the simple question which emerges for consideration is whether having regard to the Explanation and the presumption raised therein, if the Tribunal held that the presumption stood displaced in view of the circumstances of these cases, whether rebuttal was sufficient or not was a question of law or one of fact. Placing reliance on Wali Mohammad v. Mohammad Baksh 1, he urged that whether the onus had been discharged or not is primarily a question of fact and it raises no question of law. He also invited our attention to J. K. Cotton Spg. & Wvg. Mills Co. Ltd. v. Commissioner of Income-tax and Commissioner of Income-tax v. Sankarsons & Co. 8 His further submission was that the displacement of the presumption may be by evidence which was direct or circumstantial or probability of a case and when all these matters were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of fact is open to attack under section 66(1) as erroneous in law when there is no evidence to support it or if it is perverse. (iv) When the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact." The Tribunal has expressed the opinion that the questions raised are covered by the fourth proposition. Mr. Lodha's argument, however, is that it is the wrong approach on the question of burden of proof which raises a question of law. Probably the learned counsel hinted that it was the third proposition which was attracted. Strong reliance was placed by the learned counsel on Ramachandra Ayyar v. Ramalingam Chettiar , where their Lordships of the Supreme Court have observed : " On the other hand, if in dealing with a question of fact, the lower appellate court has placed the onus on a wrong party and its finding of fact is the result, substantially, of this wrong approach, that may be regarded as a defect in procedure; ..........." In our opinion, this authority does not assist the learned counsel. The onus was not wrongly placed in the cases before us. We shall represently see that it was found to have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t substantial and the Tribunal was not prepared to conclude fraud, wilful or gross neglect. The evidence which satisfied the Tribunal were the facts and circumstances of the cases which it had decided itself. The evidence may be direct or circumstantial or both. Mere statement of the assessee may be enough in some cases. What quantum of evidence would rebut a legal presumption in a given set of facts does not admit of any rigid rule. Nor does it raise a question of law. No single fact but the cumulative impact of all the facts affords the answer. We have quoted the relevant excerpts from the order setting aside the penalties. The factors have been considered in the light of the presumption. We may perhaps concede that the conclusions could be differently expressed. But that does not detract from the spirit of the conclusions. In the ultimate analysis the question which confronted the Tribunal was whether the facts and circumstances appearing on the records of the cases were adequate to rebut the presumption of fraud, wilful or gross neglect, The Tribunal found in the negative. The presumption stood rebutted. In Wali Mohammad v. Mohammad Baksh their Lordships of the Privy Council ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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