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TMI Blog1983 (8) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... year at Rs. 75,170. He found upon examination of the accounts that the assessee had made large purchases without a corresponding increase in the turnover. He also found that the accounts were not complete and that though there were wholesale transactions no quantity account was maintained nor were other details available by recourse to which wholesale transactions could be separated from retail transactions. He also found that there was no plausible explanation for the fall in the assessee's gross profit margin. Upon the basis of his determination of the total income at Rs. 75,170, the ITO initiated action for the imposition of a penalty under the provisions of s. 271(1)(c) of the Act and the minimum penalty leviable being in excess of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section." The Tribunal observed that what fell for their consideration was whether the difference between the income returned and the income assessed could be said to be due to gross or wilful neglect or fraud on the part of the assessee in terms of the Explanation to s. 271(1)(c). It noted that the Allahabad High. Court had held in Saeed Ahmad v. IAC of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal erred in holding that even where the Explanation to section 271 (1)(c) of the Income-tax Act, 1961, comes to the aid of the Revenue in raising the presumption mentioned therein for the purpose of proving the requirements of clause (c) of section 27 l(1) ibid, the burden still lies on the Revenue to prove that the difference between the 'returned income' and the 'income assessed ' has arisen due to fraud or gross or wilful neglect on the part of the assessee, although the assessee fails to prove that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. (2) Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the penalty imposed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t books had been maintained in such a manner as was possible in the facts and circumstances of the case, even assuming that the presumption contemplated by the Explanation arose, that presumption stood rebutted by the fact that there was no suppression of any sales or inflation of any purchases. Upon the mere fact that the ITO had proceeded to estimate the net profit at a figure higher than what was disclosed by the assessee, the conclusion could not necessarily follow that there was a failure to return the correct income arising out of fraud or any gross or wilful neglect on the part of the assessee. On the facts found, fraud or gross or wilful neglect on the part of the assessee stood negatived and the presumption raised by the Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the instant case rather it endorses to the hilt the reasoning of the Tribunal. In CIT v. Swarup Cold Storage General Mills [1982] 136 ITR 435 (All), the assessee contended that it had not been guilty of any fraud, gross or wilful neglect and that it filed its return on the basis of the regular books of account maintained by it. The books of account were, however, not produced. The Tribunal found that though the assessee had withheld the account books from scrutiny, since no specific finding of concealment had been made, there was scope for error in good faith. The Allahabad High Court held that the Tribunal was in error, for the assessee did not produce the account books during the assessment proceedings and thus could not justify it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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