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TMI Blog1985 (12) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... e owner of the watches and thus including the value thereof in the assessment of the assessee ? (ii Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Department had discharged its burden for establishing concealment of income by the assessee for the year under consideration and thus confirming the penalty of Rs. 90,000 levied by the Inspecting Assistant Commissioner of Income-tax? " This reference arises out of assessment of income for the assessee for the year 1974- 75. The facts leading to this reference are as under: On July 9, 1974, the assessee submitted his return of income for the assessment year 1974-75 showing a total income of Rs. 3,113 in response to a notice under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee on May 12, 1973, and after seizing the watches at about 10-30 a.m., a panchnama was prepared. The Department found that the assessee was the owner of the wrist watches and he failed to disclose the value of the watches, i.e., the income thereof in the return. Further, it was found that the Department has discharged the burden of proof by establishing the concealment of income by the assessee for the assessment year 1974-75 and as such a penalty of Rs. 90,000 was imposed. The assessee went in appeal unsuccessfully up to the Tribunal and thereafter the present reference at his instance. Learned counsel appearing for the assessee submitted that the assessee was not the owner of the wrist watches and, therefore, inclusion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o play in view of the provisions of section I 10 of the Evidence Act and when there is no definite evidence to the contrary led by the assessee to discharge the onus. This proposition finds place in J. S. Parkar v. V. B. Palekar [1974] 94 ITR 616. Further, section 69A was inserted in the Act by the Finance Act, 1964, and it came into force from April 1, 1964. The assessee in the instant case was found to be in possession of the wrist watches worth Rs. 87,455 in the course of a search of his bedroom in the assessment year 1974-75, when the provisions of section 69A of the Act were in force. No doubt, the word " income " as used in section 69A of the Act has a wide meaning and the same is adopted to mean anything which arises or comes in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the concealment of income by the assessee in the return in question and confirmation of the penalty of Rs. 90,000 imposed on the assessee is concerned, the Explanation to section 27 l(1)(c) of the Act inserted by the Finance Act, 1964, with effect from April 1, 1964, which runs thus: " Explanation.- Where the total income returned by any person is less than eighty per cent. of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome, the burden of proving absence of fraud or gross or wilful neglect on his part is on the assessee and not on the Department in view of the Explanation to section 271(1)(c) of the Act. In the instant case, the assessee has failed to discharge the burden. The aforesaid Explanation to section 271(1)(c) was substituted by four Explanations by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976. This amendment has got prospective effect. The present case relates to the assessment year 1974-75 in which year the said Explanation, inserted by the Finance Act, 1964, was in force. No doubt, the proceedings under section 271 of the Act in their very nature are penal proceedings and the elementary principle of criminal jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that of Shitaldas Permanand (annexure-F), it has been established that the assessee concealed income for the assessment year 1974-75 deliberately and as such has made himself liable to pay the penalty. The quantum of penalty, as has been imposed on the assessee by the Department, cannot be said to be excessive as Rs. 90,000 as penalty is the minimum as against concealment of income of Rs. 87,455. The maximum penalty could be Rs. 1,74,910. From the aforesaid discussion, we answer both the questions referred to us in the affirmative, in favour of the Department and against the assessee, as under: The Tribunal was justified in holding that the assessee was the owner of the wrist watches and thus including the value thereof in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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