9911796707
TMI Blog1982 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... o check on the expenses and the purchase price paid. This assessment was confirmed by the AAC. Thereafter, invoking the Explanation to s. 271(1)(c) of the I.T. Act, 1961, the case had been referred to the IAC, under s. 274(2). The IAC, holding that the Explanation to s. 271(1)(c) was attracted and that the assessee had not discharged the burden laid on him by the Explanation, imposed a penalty of Rs. 7,164. The assessee appealed against the order of penalty. While allowing the appeal, the Appellate Tribunal recorded a finding that the assessee had maintained the books as it was practicable for it to maintain and that it was not the case of the Revenue that the assessee had suppressed any sales or inflated any purchases. The Tribunal fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty imposed on the assessee under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 1964-65 was not tenable ?" There is some misapprehension about the first question which has been raised and referred by the Tribunal. The question posed for opinion seems to proceed on the footing that the Tribunal has taken the view that even in the face of the Explanation to s. 271(1)(c), in a case where the income returned is less than 80 per cent. of the total income assessed, the burden is still on the Department to prove that the difference between the returned income and the income assessed had arisen due to fraud or any gross or wilful neglect on the part of the assessee, although the assessee fails to prove that the failur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inafter in this Explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any 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." It can hardly be doubted that by adding the Explanation to s. 271(1)(c), the Legislature wanted to lay down an artificial rule of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no suppression of the figures of the purchases and/or sales and the account books have 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. Mere fact that the ITO has proceeded to estimate the net profit at figure higher than what was disclosed by the assessee, the conclusion cannot necessarily follow that there is a failure to return the correct income arising out of fraud or any gross or wilful neglect on the part of the assessee. As a matter of fact, on the facts found, a fraud or gross or wilful neglect on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation to s. 271(1)(c) and observed that the Explanation to s. 271(1)(c) of the I.T. Act, 1961, enacts a rule of evidence and the authority which imposes penalty is competent to invoke its aid in reaching the final conclusion on the question of concealment, although it may not have been resorted to at the stage when the reference was made to the authority imposing the penalty. While we may occur with the view of the Gujarat High Court that the Explanation to s. 271(1)(c) enacts a rule of evidence, it has to be noted that the decision in Kantilal Case [1981] 130 ITR 411 (Guj), sustaining the penalty turned on the fact that there was a finding that there was a manipulation of accounts. The facts in the case before us, as already pointed o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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