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TMI Blog2002 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... was right in law in upholding the penalty - - - - - Dated:- 29-8-2002 - Judge(s) : A. R. DAVE., D. A. MEHTA. JUDGMENT The judgment of the court was delivered by D.A. Mehta J.- The Income-tax Appellate Tribunal, Ahmedabad Bench "A", has referred the following question: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the penalty of Rs. 43,000 under section 271(1)(c) of the Income-tax Act, 1961?" For the opinion of this court under section 256(1) of the Income-tax Act, 1961 (for short "the Act"). The assessment year is 1975-76 and the relevant accounting period is year ended on June 30, 1974. The applicant-assessee is a partnership firm which came into existence with effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources. The assessee's appeal against the said assessment failed up to the level of the Tribunal and thus the addition came to be confirmed. Thereupon, the Income-tax Officer took up penalty proceedings under section 271(1)(c) of the Act and by order dated July 26, 1982, levied penalty of Rs. 43,000 (the minimum being Rs. 42,952). The said penalty was confirmed by the Commissioner of Income-tax (Appeals) and also by the Tribunal. It is against the aforesaid order of the Tribunal dated May 13, 1986, that the present reference has been preferred. Mr. S.N. Divetia, the learned advocate appearing on behalf of the applicant-assessee, submitted that the penalty had been wrongly levied and confirmed by the authorities below. In support of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal failed to apply the correct provision of law and hence the matter should be remanded to the Tribunal for applying the correct provision and appreciate the explanation of the assessee in the light of the same. It was submitted that Explanation 1 to section 271(1)(c) of the Act as was applicable from April 1, 1976, had been applied in the case of the assessee instead of the Explanation which was applicable up to March 31, 1976. It was contended that the scope of both the Explanations, i.e., one which existed up to March 31, 1976, and one which was applicable from April 1, 1976, was different and the assessee should not be penalised by invoking an Explanation which was not applicable to the assessment year under consideration. In suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted the plea for remanding the matter to the Tribunal for applying the said Explanation, but for the fact that the assessee has not been able to show, even prima facie, that on the facts which have already come on record it would be in a position to tender any explanation which would enable the assessee to discharge the rebuttable presumption which would arise by virtue of the statutory Explanation under section 271(1)(c) of the Act. The facts which have come on record and which are not disputed, show that the assessee had made payment on certain dates when no sufficient cash was available with the assessee. The factum of payment on that particular day has been established from the contra accounts of the parties from whom the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption is raised against the assessee that the assessee is guilty of fraud or gross or willful neglect as a result of which he has concealed the income but this presumption can be rebutted. The rebuttal must be on materials relevant and cogent." As to what could be the explanation by which the assessee can rebut the presumption raised against it, is stated by the apex court in the same decision in the following words while confirming the view expressed by the Full Bench of the Patna High Court in the case of CIT v. Nathulal Agarwala and Sons [1985] 153 ITR 292: "The Patna High Court emphasised that as to the nature of the explanation to be rendered by the assessee, it was plain on principle that it was not the law that the moment any fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant-assessee must be granted a second innings. As laid down by this court in the case of CIT v. Harikishan Jethalal Patel [1987] 168 ITR 472, it is necessary that foundational facts exist so as to raise even a remote doubt which would permit a party to seek a second innings as otherwise it would result in a situation whereby the case which is covered by a decision of the apex court would require to be reopened at any length of time. As already seen hereinbefore, there are no facts which would prima facie go to show that the assessee deserves a second innings. In the light of what is stated hereinbefore the question referred to this court is answered in the affirmative, i.e., against the assessee and in favour of the Revenue. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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