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TMI Blog2000 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner of Income-tax (Appeals) ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact in holding that the assessee's case falls under clause (B) of Explanation 1 of section 271(1)(c) and so Explanation 1(A) is not applicable to the facts of the case ?" The background facts, as indicated in the statement of case, are as follows : The assessee is a public limited company engaged in the business of manufacturing yarn. For the assessment year 1979-80, it was assessed to tax on a total income of Rs. 21,06,690. In appeal, the Commissioner of Income-tax (Appeals), Calicut (in short, "the CIT(A)"), reduced the total income to Rs. 14,55,300. Further reduction of Rs. 57,719 was allowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed in appeal. Penal proceedings under section 271(1)(c) of the Act were initiated on the ground that the assessee had concealed its income by inflating the consumption of raw materials account. In response to the show-cause notice, the assessee explained that there was no inflation in the said account and that two quantities of 2,049.5 kgs. and 650.5 kgs. were actually received from outside parties. The entries in the registers showing receipts from the processing department and the dyeing department were explained to be wrong entries by clerical error. The Assessing Officer without accepting the plea of the assessee, levied penalty of Rs. 1,75,000 under section 271(1)(c) of the Act. In the first appeal, the Commissioner of Income-tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lating to consumption and materials have been disclosed. In the absence of such a finding, it was submitted, the order of the Tribunal is not sustainable. Learned counsel for the assessee, on the other hand, submitted that on analysing the factual position, the Tribunal had concluded that the explanation offered was not substantiated. But that did not necessarily bring in the concept of concealment and the proviso to Explanation 1(B) is clearly applicable. The finding being factual, no question of law arises. The Tribunal analysed the factual aspects in detail. It was observed that there is no dispute about the assessee having received raw materials from outside parties. In fact, the explanation of the assessee was accepted by the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y,---... (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income : Provided that, if in a case falling under clause (c) the amount of income (as determined by the Income-tax Officer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty-five thousand rupees, the Income-tax Officer shall not issue any direction for payment by way of penalty without the previous approval of the Inspecting Assistant Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or he cannot substantiate the explanation offered by him or the explanation offered by him is found to be false, the relevant income shall be deemed to be his concealed income. If, however, the explanation offered by him is bona fide and all the facts relating to the explanation and material to the computation of the total income have been disclosed by him, Explanation 1 will not be applicable. As is clear from the explanatory notes relating to the amendments by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 (Act 46 of 1986), the inadequacy of the Explanation added by the Finance Act, 1964, led to the subsequent substitution by the 1975 Amendment Act, of four Explanations. As per the proviso, Which was in force at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome and that his case falls under clause (B) and so, clause (A) of Explanation 1 had no application to the facts of the case. just before arriving at the conclusion, the requirements of the statutory provision were noted. Whether the burden of proof in a given case has been discharged on a set of facts is a question of fact. Similarly, whether the presumption under Explanation 1 to section 271(1)(c) has been rebutted in a particular case by evidence, is a question of fact. Where the fact finding body, bearing in mind the correct principle, comes to the conclusion that the assessee has discharged the onus, it became a conclusion of fact (see CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 (SC)). Since the Tribunal has based its conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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