9911796707
TMI Blog1993 (11) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... and spare parts was maintained on a day-to-day basis and no vouchers have been produced before the Income-tax Officer and only purchase and sale of tyres was shown by the assessee. The vouchers for the sale of such tyres were also not produced and, therefore, the net profit rate of 20 per cent. subject to depreciation on total receipts of Rs. 1,69,462 was made resulting in an addition of Rs. 87,705. The Income-tax Officer also observed that generally the rate applied is from 30 per cent. to 40 per cent. but since the assessee has plied the buses on kachha roads, the rate of profit of 20 per cent. was applied. The Income-tax Officer initiated penalty proceedings under section 271(1)(c) of the Income-tax Act read with the Explanation thereto. As the total income returned was less than 80 per cent. of the total income assessed, the assessee was deemed to be guilty of concealment of income or of furnishing of inaccurate particulars of such income, unless he proved that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. In the quantum appeal, the percentage of 20 per cent. applied was upheld, but the receipts were reduced t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be discharged by the assessee but once he is able to satisfy that there was no fraud or gross or wilful neglect on his part then the onus is shifted to the Revenue to establish the various ingredients of the section. The presumption raised by the Explanation to section 271(1)(c), therefore, is a rebuttable presumption. From a perusal of the order of the Income-tax Appellate Tribunal, it is evident that the penalty has been set aside on the basis of the decision given by the apex court in the case of Anwar Ali [1970] 76 ITR 696 referred to above and it was observed that even if additions which were made in the assessment order have been upheld in appeal, unless it is established that the additions made represented the assessee's own income earned in the relevant previous year which was suppressed in order to defraud the Revenue, penalty cannot be levied. An observation has also been made that the difference between the income declared and the income assessed was not due to any fraud or gross or wilful neglect. The Income-tax Officer has found in the assessment order that the assessee failed to produce any voucher for sale of tyres. Motor parts were sold to Shri Abdul Sattar, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions which are made in the assessment order, which is final even on the basis of best judgment assessment, have to be made on certain principles and once that assessment order is upheld finally, then it was the duty of the assessee to have submitted his explanation that there was no fraud or any gross or wilful neglect on his part. The word " neglect " refers to negligence, which should be of utter want of care and diligence. If a particular thing is required to be done then a case of negligence may arise if it is not done due to want of care or due to negligence. It is in the facts of each and every case in which it has to be examined as to whether there was any neglect on the part of the assessee or not. The word " fraud " involves mens rea. The words " gross and wilful neglect " also have the same character. The circumstances leading to the framing of the assessment and the explanation which the assessee may give are relevant factors to come to this conclusion. Before applying the ratio of Anwar Ali's case [1970] 76 ITR 696 (SC), it was necessary for the Income-tax Appellate Tribunal to come to the conclusion that the initial burden which was on the assessee on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit rate may or may not be proper explanation. There may be cases where proper books of account are maintained or even if some defect is found therein, the difference between the returned income and the assessed income, it could be said that the application of gross profit rate is not on account of any fraud or gross or wilful neglect on the part of the assessee. The presumption which has been raised by the Explanation is rebuttable and the Explanation has only created a rule of evidence to discharge the burden which was earlier on the Department before the insertion of the Explanation. The proof for discharge of burden with regard to the Explanation or evidence could be as is required in a civil case, namely, based on a preponderance of probabilities or a reasonable explanation. The absence of an explanation or evidence makes the Explanation applicable. In the present case, the returned income was in the negative, i.e., it was a return of loss of Rs. 3,650. The provisions of section 145 of the Act were invoked. In the quantum appeal, the Tribunal has observed that the assessee has not maintained any log book for day-to-day running of the buses. No consumption register for fuel and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
