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TMI Blog1986 (1) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... alled " the assessee "), held a British passport. On March 17, 1971, the Enforcement Directorate searched his residential house at 14-B Model Town, Jullundur, under the provisions of the Foreign Exchange Regulation Act, 1947, and recovered a suit case containing Indian currency notes of Rs. 6,00,000 from his bedroom. When the Income-tax Officer came to know of the search and recovery of the amount, he initiated assessment proceedings for the assessment year 1971-72 and served a notice under section 139(2) of the Income-tax Act, 1961 (for short " the Act "), on the assessee on April 2, 1971. On June 21, 1971, the assessee filed a return declaring an income of Rs. 3,850 with certain remarks in Part IV of the return. In the remarks, he stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner, on an examination of the evidence, held that 12 items were found to be genuine advances/loans obtained by the assessee from certain parties but found that the following three items were not proved to be genuine: Rs. i) Shri Lembar Singh 25,000 ii) Shri Rachpal Singh 50,000 iii) Shri Harcharan Singh 13,000 The total of the aforesaid items is Rs. 88,000 and by amending the order of the Income-tax Officer, addition of Rs. 88,000 towards the total income of the assessee was made. Both sides went up in separate appeals before the Tribunal and both the appeals were dismissed and the addition of Rs. 88,000 in the income of the assessee was sustained. This chapter stood closed thus. In the penalty proceedings, the Inspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished inaccurate particulars in respect of the same and that the disputed amount is a revenue receipt. Both the aforesaid decided cases relate to the law as it prevailed before the amendment made by the Finance Act 5 of 1964 which was materially different after the aforesaid amendment. The aforesaid decisions were based on the Supreme Court judgment in CIT v. Anwar Ali [1970] 76 ITR 696, which also related to the provisions of law, as it stood before the aforesaid amendment. This court in Addl. CIT v. Karnail Singh V. Kaleran [1974] 94 ITR 505, had taken the view that in spite of the aforesaid amendment, no change was brought out and the onus was still on the Department and in penalty proceedings, the Department had to prove from indep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's sake, these may be formulated as under: (i) that the amount of the assessed income is the correct income and it is in fact the income of the assessee himself; (ii) that the failure of the assessee to return the aforesaid correct assessed income was due to fraud; or (iii) that the failure of the assessee to return the aforesaid correct assessed income was due to gross or wilful neglect on his part. Now, it would follow from the above and the factum of the presumptions spelled out therein that, in essence, the Explanation is a rule of evidence. This indeed appears to be well established both on the language and the principle of the Explanation as also by a plethora of precedents holding to the same effect. Further, it must at once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs to show and prove that on the existing material itself the presumption raised by the Explanation would stand rebutted. " A reading of the aforesaid quotation clearly shows that it has to be presumed (i) that the assessed income is the income of the assessee; (ii) his failure to return the correct income is due to fraud; and (iii) his failure to return the correct income was due to gross or wilful neglect on his part. However, these presumptions are rebuttable. Therefore, the law after the amendment of 1964 is totally different from the law which prevailed before that amendment and the Tribunal decided on the basis of law which was applicable before the aforesaid amendment. In any case, it decided on the basis of the law laid down in Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, neither the amended provision can be seen nor the Explanation added to it can be seen. We find no merit whatsoever in this argument. It cannot be denied that the matter has to be decided on the basis of the law which would be applicable to given facts. Even remotely, we do not find that the Inspecting Assistant Commissioner or the Tribunal was not aware that section 271(1)(c) stood amended in the year 1964. Moreover, even in the question which came up for consideration before the Full Bench of this court, only section 271(1)(c) was mentioned and there was no mention of either the amended Act or of the Explanation added. When for the year 1971-72 with which we are concerned in this case, section 27 l(1)(c) of the Act has to be seen, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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