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TMI Blog1984 (2) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of commodities covered by the licences at the time of the assessment, the ITO called for full details of the parties to whom the licences were sold, the details of the commodities and the profit earned with reference to each of the import licences. Since complete details had not been furnished by the assessee, the ITO, estimated the income earned by the sale of licences based on the market quotations on premiums published in financial journals. The income determined by the ITO for each of the three years and the income finally sustained by the Appellate Tribunal are as follows : --------------------------------------------------------------------------------------------------------------------------------------------------- " Assessment Income determined by the Income finally year Income-tax Officer sustained by the A.T. on appeal --------------------------------------------------------------------------------------------------------------------------------------------------- Rs. Rs. 1967-68 2,07,361 1,23,380 1968-69 1,07,860 92,070 1969-70 1,50,770 1,23,380 " Thereafter, penalty proceedings under s. 271(1)(c) of the I.T. Act, 1961, were initiated. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale price shown in the return was considerably low when compared with the market quotations published in financial journals while estimating the assessee's income by sale of import licences. Though the estimates have been reduced by the Tribunal, still the assessment is one based on estimate. The question is, whether the view taken by the Tribunal that wherever the assessment is based on an estimate, the penalty provisions are not applicable, can be legally sustained. In Bashu Sahib v. CIT [1977] 108 ITR 736 (Mad), however, this court has expressed a contrary view. In that case, the court had observed that " it cannot be said that in all cases where the taxing authorities estimated the income at figure higher than that estimated by the assessee, no penalty was leviable. Where the estimate of the assessee amounts to a deliberate understatement, an inference of concealment of income could certainly be drawn ", if the facts and circumstances justify such an inference. In that case, the assessee, a bus operator, though maintained accounts, did not produce the same before the assessing authority, naturally leading to an estimate of income, after rejecting the return of income file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to have deliberately concealed his true income which is sufficient to attract s. 271(1)(c). In a recent judgment of this court in T.C. No. 435 of 1978 dated September 28, 1983 [ CIT v. Rajan [1985] 151 ITR 189 (Mad)], this court, while construing the scope of s. 271 (1)(c), specifically held that even in cases of assessment based on an estimate, the penalty provisions could be invoked and the contrary decision taken by the Tribunal in that case is inconsistent with the statutory provision. Thus, in cases of assessment on the basis of an estimate, applicability of s. 271(1)(c) cannot be ruled out. Then the question arises as to whether the facts and circumstances of this case will lead to an inference of concealment of income or furnishing of inaccurate particulars of such income as contemplated by sub-clause (c) of s.271(2) As already stated, the assessee as furnished the income by way of sale of import licences at a figure which was far below the market quotations. With a view to verify the correctness of the assessee's return, the assessee was asked to give details of the articles for which the import licences were obtained and the names of the parties to whom the licences h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, he will be presumed to have concealed particulars of his income unless he establishes that the hiatus between his return and his assessment was not due to fraud or wilful neglect in the filing of the return. It is true that even in cases where the Explanation initially applies because the returned income is less than 80 per cent. of the assessed income, if the assessee establishes that this gap is not due to any fraud or wilful neglect on his part, he could be taken to have rebutted the presumption of concealment, and it is then for the Department to establish by cogent material that the assessee had concealed his income. In this case, the assessee has not established that the gap between the income returned and the income assessed is not due to any fraud or wilful neglect on its part, for, it did not produce the requisite material even when called for, for proving the correctness of the income returned. The only explanation given by the assessee is that it is not able to produce the records because of lapse of time. The non-production of the materials called for ascertaining the correctness of the income returned can be taken to be either due to fraud or wilful neglect. The ..... 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