9911796707
TMI Blog1991 (6) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,45,992. The assessing authority determined the assessable income at Rs. 1,47,700 and tax was levied thereon. Subsequently, the assessment was reopened. In the return filed pursuant to the notice under section 148 of the Income-tax Act, 1961 (for short "the Act"), an additional amount of Rs. 43,607 was also shown, which according to the assessee was omitted to be shown in the original return. The assessing authority estimated the escaped income liable to be assessed at Rs. 52,093 and a reassessment order was passed on March 19, 1973. The assessing authority initiated proceedings under section 271(1) (c)of the Act on the basis that the assessee had concealed the particulars of his income. Since the concealed income exceeded Rs. 25,000, the assessing authority referred the matter for further action to the Inspecting Assistant Commissioner, Ernakulam Range. The Inspecting Assistant Commissioner held that the disclosure was made only after the conclusion of the original assessment proceedings. Having found that there was concealment of income in those proceedings, he levied an amount of Rs. 50,000 as penalty. A second appeal was filed before the Income-tax Appellate Tribunal, Cochi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total income (hereinafter in this Explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this subsection. " Before the introduction of the Explanation to section 271(1)(c), the onus was on the Revenue to prove that the assessee had concealed the income or that he had furnished inaccurate particulars. It was to obviate the difficulties created in proving the fact of concealment that the Explanation was added. On the onus of establishing concealment, when the matter was covered by the Explanation, a Division Bench of the Madras High Court in CIT v. Prakasam Readymade Stores [1983] 140 ITR 601, 604, held thus : "The normal rule in matters of penalty is that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the presumption is a rebuttable one and if the fact-finding body on relevant and cogent materials comes to the conclusion that in spite of the presumption the assessee was not guilty, such conclusion does not raise any question of law. " The Supreme Court further observed that if a party comes within the mischief of the Explanation, then there is a presumption against him and the onus to discharge the presumption lies on the assessee, but being presumption, it is a rebuttable one, and if on appropriate materials the Tribunal has rebutted that presumption, no question of law can be said to arise. On a review of the decision, a Division Bench of this court in CIT v. Saraf Trading Corporation [1987] 167 ITR 909 stated the gist of the law thus (Headnote) : "Penalty proceedings are penal in nature. The elementary principles of criminal law will apply. It is a quasi-criminal proceeding. There should be conscious concealment. The provisions should be construed strictly. Penalty proceedings are distinct and different from assessment proceedings. The findings in the assessment proceedings are not conclusive but are relevant. The entire materials available should be considered afresh by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on November 22, 1972, that the gold stock represented the assessee's stock. On December 8, 1972, a letter was written by the assessee to the Income-tax Officer referring to the admission made by the advocate that the firm had not disclosed the correct income in the past and that the same had been brought to account in the shape of gold advances received for manufacturing ornaments. It was contended before the Tribunal that Sri Jose filed a return on the basis of the account and, at that time, he had no reason to suspect that there was suppression of income in the account by making false entries regarding the stock of gold. It was further contended that Sri Jose became aware of the true position only when the matter came under scrutiny during the proceedings relating to the assessment year 1972-73 and that the partners had immediately admitted the correct position and agreed to the escaped income being assessed. On a consideration of these circumstances, the Tribunal opined that it cannot be presumed that Sri Jose was in the know of everything that was going on in the business. The managing partner was his father who had been carrying on the business earlier. A partnership was fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in CIT v. Nathulal Agarwala and Sons [1985] 153 ITR 292 [FB], 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 fantastic or unacceptable explanation was given, the burden placed upon him would be discharged and the presumption rebutted. The Supreme Court further agreed with the view of the Patna High Court that it is not the law that any and every explanation by the assessee must be accepted. It was observed that it must be an acceptable explanation, acceptable to a fact-finding body. If such a fact-finding body comes to the conclusion that the assessee has discharged the onus, it becomes a conclusion of fact. On behalf of the Revenue, Sri Menon would contend that the question is not a pure question of fact but is a mixed question of law and fact. Relying on the decision in Monghyr Electric Supply Co. Ltd. v. CIT [1954] 26 ITR 15 (Patna), it is contended that the Tribunal has applied a wrong legal principle and the matter passes from the realm of fact into the realm of law. The Patna High Court, in that case, held that the High Court is entitled to interfere with the finding of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile he is a partner. Counsel would, therefore, contend that the assessee being a firm and the return having been submitted by one of the partners, the act of that partner binds the firm. There cannot be any dispute regarding these propositions of law. That there has been concealment of income has been found by the Tribunal. That the total income returned is less than 80% of the total income assessed is also not disputed. The Explanation to section 271(1)(c) also raises a presumption that, in such a case, the assessee is deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. Such a presumption was drawn by the Tribunal and, thereafter, the question whether the assessee has proved absence of fraud or gross or wilful neglect on his part was considered by the Tribunal. The Tribunal was aware of the direction of this court in CIT v. P. T. Antony and Sons [1985] 151 ITR 34, and the limited question which it was called upon to consider. That is manifest from the following observation contained in paragraph 11 of the Tribunal's order: "The only question that the Tribunal has now to consider is whether the assessee had shown that the fail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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