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TMI Blog1986 (7) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... iated penalty proceedings under section 271(1)(c) of the Act of 1961. A show cause notice was issued by the Income-tax Officer to the assessee. The assessee did not file any explanation in writing in response to the said notice. The assessee, however, appeared before the Income-tax Officer and submitted that an appeal had been preferred to the Income-tax Appellate Tribunal against the decision of the Appellate Assistant Commissioner confirming the addition to the assessee's income. The Income-tax Officer found that the assessee had not filed any satisfactory explanation as to why penalty should not be imposed on him and passed an order on March 11, 1977, imposing a penalty of Rs. 15,830, the minimum imposable on the assessee. Being aggrieved, the assessee filed an appeal against the order of penalty before the Appellate Assistant Commissioner. It was contended before the Appellate Assistant Commissioner that an explanation had been filed before the Income-tax Officer who did not consider the same and imposed the order of penalty without giving the assessee any opportunity of being heard. It was also contended that the quantum of penalty was not computed properly. The Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant assessment year which he failed to show in his return and thereby committed breach of the provisions of section 271 of the Act. The Tribunal held that the Income-tax Officer had duly required the assessee to show cause in the penalty proceedings but the assessee did not file any explanation before the Income-tax Officer and, therefore, the, Income-tax Officer had to depend on the facts available on record. The Tribunal held further that the Explanation to section 271 was definitely applicable to the facts of the assessee's case. It was held that the assessee had failed to discharge the burden cast on him under the Explanation to section 271 and that the Revenue had proved whatever was necessary in order to attract the provisions of the said section. The Tribunal held further that the Income-tax Officer imposed the order of penalty relying on the Explanation to section 271. The Tribunal allowed the appeal of the Revenue and confirmed the order of penalty. On an application of the assessee under section 256(1) of the Income-tax, 1961, the following question has been referred as a question of law arising out of the order of the Tribunal for the opinion of this court: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time to time. Her husband, the father of the assessee, was practising advocate at Balurghat, West Bengal. It was also noted as found by the Income-tax Officer that when the property was purchased, all the brothers of the assessee except one were earning. One of the brothers was a businessman, another was a service holder, the third one was an advocate and the fourth one was a medical practitioner. The assessee and another brother were students at that time. On the basis of the aforesaid, the learned advocate submitted that these materials were on record and were available to the authorities. It was submitted that the Income-tax Officer, the Appellate Assistant Commissioner and the. Tribunal took note of and proceeded on the basis of the records in the assessment proceedings in the penalty proceedings. The learned advocate for the assessee submitted further that none of the authorities from the Income-tax Officer upwards imposed or confirmed. the penalty by strict application of the Explanation to section 271(1)(c) Having proceeded on the basis of the materials on record, it was submitted that the authorities had erred in holding that there was no explanation from the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following observations (at page 701): " Before penalty can be imposed, the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. " (c) CIT v. K. S. Kannan Kunhi [1973] 87 ITR 395 (SC). This decision was cited to show that the Supreme Court approved the decision of the Kerala High Court in the case of K. S. Kannan Kunhi [1969] 72 ITR 757. The Supreme Court refused to interfere with the decision of the Kerala High Court on the ground that the Revenue authorities and the Tribunal had not examined the merits of the assessee's case and had arbitrarily rejected the explanation given by the assessee. (d) CIT v. Nav Bharat Automobiles [1976] 102 ITR 278. This decision of a Division Bench of the Allahabad High Court was cited for the proposition that the Revenue could rely on the Explanation to section 271(1)(c) only when it was shown that the income returned by the assessee was less than 80% of the assessed income. In order to find out whether the income returned was less than 80% of the assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed on the basis of such explanation. (i) CIT v. Jagadish Prasad Agarwalla [1980] 126 ITR 726 (Cal). This decision was cited for the following observation by a Division Bench of this court (at page 731) : " This court has followed the Supreme Court and in certain cases has directed the Tribunal to make a further enquiry on fresh evidence to determine the controversy. This cannot be done in each and every case. Such course was adopted by the Supreme Court in the following cases: (a) where the language used by the Tribunal in recording its finding was obscure and its meaning could not be determined ; (b) where the Tribunal failed to consider and decide the applicability of the provisions of a statute; (c) where the Tribunal had completely misdirected themselves on a question of fact; (d) where the Tribunal had overlooked any significant material on record or failed to consider any relevant material or evidence ; (e) where the Tribunal had failed to draw necessary conclusions from the primary facts as found. " (j) CIT v. Rupabani Theatres P. Ltd. [1981] 130 ITR 747 (Cal). This decision of another Division Bench of this court was cited for the following observations (at page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied for the proof of a positive fact, while the standard of preponderance of probability is sufficient to prove a negative fact. What the Explanation demands or requires of the assessee is the discharge of the onus of proof of a negative fact, namely, that there has been no active concealment or fraud or wilful neglect on the part of the assessee. Where the onus is on one to prove a negative fact, direct evidence, generally and ordinarily, may be hardly possible. It is, however, too well-settled that circumstances of mere suspicion will not warrant the conclusion of fraud. If the broad probabilities of the explanation offered are such as may be believed, though not sufficient for conclusive proof, the onus to prove such a negative fact can well be said to have been discharged by the assessee. He may discharge this onus by placing the facts found in the assessment order to show that the facts found therein had not in the least given an inkling as to fraud or gross or wilful neglect on the part of the assessee and, therefore, it must be held without proof of any other fact that there was no fraud committed by the assessee in his failure to return the correct income nor that he wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order, has noted that the assessee did not file any explanation before the Income-tax Officer. It has also found that on the facts available on record, the assessee had not correctly shown his income or concealed the particulars of his income. The Tribunal came to the conclusion that the Explanation to section 271(1)(c) was applicable to the case of the assessee. The Tribunal held that there was nothing on record to show that at the relevant time the assessee was a student. Fresh evidence on this point was not entertained. From the orders passed in the assessment proceedings, it does not appear that any particular evidence, oral or documentary, was adduced by the assessee in the assessment proceedings which were available to be considered either at the assessment proceedings or at the penalty proceedings. A contention was made on behalf of the assessee in the assessment proceedings that he was a student at the relevant time. But it is a mere contention without any evidence. In any event, it appears to us that penalty proceedings are separate from assessment proceedings. The records, exhibits and orders passed in the assessment proceedings would undoubtedly be cogent evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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