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TMI Blog2004 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... eleting the penalty imposed by invoking the provision of section 271(1)(c) read with the Explanation thereto and it cannot be stated to be a finding which was either unreasonable or perverse. - - - - - Dated:- 29-12-2004 - Judge(s) : D. A. MEHTA., MS. H. N. DEVANI. JUDGMENT The judgment of the court was delivered by D.A. Mehta J.- The Income-tax Appellate Tribunal, Ahmedabad Bench "B", has referred the following two questions of law under section 256(2) of the Income-tax Act, 1961 ("the Act"), at the instance of the Commissioner of Income-tax, Central, Ahmedabad. "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has been right in law in deleting the penalty imposed by the Income-tax Officer unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. In the penalty proceedings the Assessing Officer, after considering the explanation tendered by the assessee, levied penalty at Rs. 1 lakh under section 271(1)(c) of the Act by holding that the Explanation to section 271(1)(c) of the Act was clearly applicable and the assessee had failed to discharge the onus under the Explanation and this was a case of deemed concealment. The assessee carried the matter in appeal but failed to convince the Commissioner of Income-tax (Appeals) who confirmed the penalty levied by the assessing authority. The assessee went in second appeal before the Tribunal and the Tribunal, for the reasons stated in its order of March 28, 1984, accepted the explanation tendered by the assessee and cancelled the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal has found that during the course of assessment proceedings the gross profit shown by the assessee was found by the Assessing Officer to have fallen by 2 per cent, as compared with the gross profit for the immediately preceding assessment year despite the fact that the turnover had increased from about Rs. 47 lakhs to Rs. 77 lakhs. The Assessing Officer, therefore, while framing the assessment made a lump sum addition of Rs. 2 lakhs with the approval of the Inspecting Assistant Commissioner under section 144B of the Act. The said lump sum addition came to be reduced by Rs. 1 lakh by the Commissioner of Income-tax (Appeals). The Tribunal ultimately confirmed the addition of Rs. 1 lakh. The reason for making the lump sum addition was, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as under (headnote): "The Explanation creates a legal fiction if the condition of its applicability is satisfied. The condition is an objective condition, namely, that the total income returned by the assessee should be less than eighty per cent. of the total income assessed, and the assessee is straightaway brought within the penal provision in section 271(1)(c). But this legal fiction can be displaced if the assessee proves-and this burden is upon him-that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. This burden is not of the same nature which rests on the prosecution in a criminal case where the prosecution has to establish the guilt of the accused beyond reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsatisfactory was also accepted; in relation to the third point regarding bearer cheque of Rs. 30,000. The explanation tendered by the assessee that a partner of M/s. Akbarali Nazarali had encashed the cheque and temporarily utilised the funds before bringing them into the books of the firm in the subsequent years has also been found to be a probable explanation by the Tribunal. After recording the aforesaid findings the Tribunal has held that the explanation given by the assessee in respect of the above points raised by the assessing authorities are such that the balance of probabilities is in favour of the assessee and in so far as the discrepancies in the books of the seller are concerned, that was a matter for the said firm to explain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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