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TMI Blog1980 (3) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 1968-69 found that there were two items, along with some others, for which the assessee was unable to furnish a reasonable explanation. One of the items, relating to which the explanation of the assessee was not accepted by the assessing authority, was in respect of a sum of Rs. 24,000. The case of the assessee in respect thereof was that the said amount had been obtained as a loan from the Life Insurance Corporation of India. No evidence was furnished on behalf of the assessee before the assessing authority to show that the said sum of Rs. 24,000 represented a loan from the LIC or that any loan at all was taken by the assessee from the LIC during the relevant accounting year. The other amount was a sum of Rs. 6,500, in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 1968-69, the assessing authority directed on March 22, 1972, that notice under s. 271(1)(c) of the Act be issued to the assessee. After considering the explanation furnished by the assessee in the penalty proceedings, the IAC, Range II, Jaipur, by his order dated March 18, 1974, held that these amounts of Rs. 24,000 and Rs. 6,500 represented the concealed income of the assessee along with other amounts of Rs. 10,000, and penalty was imposed in respect thereof. On appeal, the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, by its order dated July 23, 1975, accepted the appeal of the assessee in respect of the other amount of Rs. 10,000.But, so far as these two amounts of Rs. 24,000 and Rs. 6,500 were concerned, it was observed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y gross or wilful neglect on the part of the assessee, any imposition of penalty in such circumstances was unjustified. Under s. 271(1)(c), penalty can be imposed in a case where the assessee had concealed the particulars of his income or furnished inaccurate particulars of such income and in such a case, the penalty imposed shall not exceed twice the amount of tax sought to be evaded, by reason of concealment of particulars of income or the furnishing of inaccurate particulars of such income. The Explanation, which was added to s. 271 by the Finance Act, 1964, with effect from 1st April, 1964, reads as under: " Explanation.-Where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. For example, if an assessee gives an explanation which is unproved, but not disproved, i. e., it is not accepted but the circumstances do not lead to the reasonable and positive inference that the assessee's case is false, the Explanation cannot help the department because there would be no material to show that the amount in question was the income of the assessee, On the other hand, where the income returned is less than eighty per cent. of the income assessed and the amount assessed is proved by the department to represent the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was no fraud or gross or wilful neglect on his part in furnishing his return. In Addl. CIT v. Noor Mohd. & Co. [1974] 97 ITR 705 (Raj), this court held that the Explanation raises a rebuttable presumption and that in the ultimate analysis the question which confronted the Tribunal in such matters was whether the facts and circumstances appearing on the records of the case are adequate to presume fraud or wilful or gross neglect. If the Tribunal found the same in the negative, the presumption stood rebutted. Following the decision of their Lordships of the Privy Council in Wali Mohammad v. Mohammed Baksh, AIR 1930 PC 91, this court held that the question, whether the statutory presumption is rebutted by evidence or not, is always a q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd adding the said two amounts to the total income of the assessee was a piece of evidence which could be relied upon by the concerned authorities in the penalty proceedings, although the assessee had every right and was also afforded an opportunity to prove to the contrary. It may be observed that the Explanation to s. 271 was already on the statute book and when s. 271 was referred to, the entire section, including the Explanation thereof, was referred. The Explanation need not be referred to separately and it automatically came into play in case where the returned income was less than 80% of the assessed income. In the present case, the assessee led no evidence about the source of the two amounts of Rs. 24,000 and Rs. 6,500 either before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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