9911796707
TMI Blog1985 (1) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 10,000 was claimed to be sale proceeds of agricultural produce of the lands which had been sold. The aforesaid sums had been received by two bank drafts -one for Rs. 1,00,000 and another for Rs. 10,000. The ITO accepted the explanation of the assessee in regard to the receipt of Rs. 1,00,000 being the value of lands sold and which had been transmitted to the partners by bank draft. He, however, did not accept the explanation of the assessee in regard to Rs. 10,000 being receipt from the sale proceeds of agricultural produce of lands which had been sold under three deeds. The said sum of Rs. 10,000 was added as income of the assessee and assessed as such. The order of the ITO is annexure A to the statement of the case. The assessee agitated against the adding back of the said sum of Rs. 10,000 in appeal and before the Tribunal, but without any success. The returned income of the assessee being less than 80% of the assessed figure, penalty proceeding under the Explanation to s. 271(1)(c) of the I.T. Act (hereinafter referred to as " the Act ") was initiated. In the penalty proceeding, besides other matters, the assessee disputed the correctness of the order of the ITO i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Appellate Tribunals were of the view that the introduction of Explanation to s. 271(1)(c) had made no difference in law in regard to imposition of penalty. The law on the subject has now been set at rest. The Explanation had been introduced precisely to set at naught the law laid down in Anwar Ali's case [1970] 76 ITR 696 (SC). It does not need much argument to persuade one to the view that the law laid down in Anwar Ali's case [1970] 76 ITR 696 (SC), is no longer the law of the land. The law now is that where the difference between the assessed income and the returned income is more than 20% of the assessed income, it will be for the assessee to prove that the failure to return the correct income was not due to any fraud or gross or wilful neglect on his part. Prior to the introduction of the Explanation which came into effect from April 1, 1964, the law was that it was for the Department to show that the assessee had deliberately concealed the particulars of his income or failed in furnishing accurate particulars of such income. The onus now has shifted on to the assessee to establish that there was no fraud or gross or wilful neglect on the part of the assessee in not ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. Will his mere explanation as to the source of the said s am be sufficient to hold that it was not his income, but was a gift from his uncle and must some evidence be adduced or circumstances shown to lead to the conclusion that the assessee's uncle in all probability gave that sum as gift. In my view, the mere assertion which is the explanation dished out by him cannot be sufficient to discharge the onus expected of him in terms of the Explanation to s. 271(1)(c) of the Act where the stand or assertion of the assessee can be established by positive evidence. It may be established by oral evidence or by documentary evidence or both. That will not amount to expecting the assessee to prove the negative. It will be proof of the positive by the standard of probability or reasonability or the standard applied to civil cases. In my considered opinion, the mere dishing out of an explanation will not be sufficient to discharge the onus on the assessee. It cannot be denied that the circumstance showing the probability of explanation may be existing on the record itself and need not necessarily be external materials adduced during penalty proceedings, but there must be something on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the observation or finding " the explanation given was quite plausible " was given just to circumvent the Explanation in s. 271(1)(c) under the impetus of Anwar Ali's case [1970] 76 ITR 696 (SC). Even so, the finding is a finding of fact and is binding upon us. The finding in regard to the explanation of the assessee being plausible, the order of penalty must be struck down. Learned standing counsel for the Revenue submitted that the explanation of the assessee having been rejected in the assessment proceeding, it was not open to the Tribunal to accept the same in the penalty proceeding. The proposition is rather wide. The same topic had cropped up for consideration in Anwar Ali's case [1970] 76 ITR 696 (SC) and the Supreme Court observed as follows (p. 701): " It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive. However, it is good evidence. 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 partic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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