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TMI Blog1977 (8) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... income from business in grocery. For the assessment year 1960-61, the assessment was completed by adopting an income of Rs. 48,255. The assessment was reopened Under s. 147 of the Act and the ITO made the reassessment treating the income to be Rs. 68,255 and the enhancement of Rs. 20,000 was on the basis of income from undisclosed sources. A cash credit of that amount appearing in the assessee's books in the name of one, M/s. Harnarayan Prabhudayal of Calcutta, was not accepted to be a cash credit. The ITO started a penalty proceeding under s. 271(1)(c) of the Act and the IAC imposed a penalty of Rs. 12,900. The assessee thereupon appealed to the Tribunal against the imposition of penalty. The Tribunal examined the matter at some length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced by the assessee by proving that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. It is to be noted that the penalty proceeding continues to be penal in nature even after the introduction of the Explanation. The quantum of proof necessary to discharge the onus by the assessee would be as in a civil case, that is, by preponderance of probabilities. After applying the Explanation the taxing authorities would take into consideration all the facts and circumstances, pros and cons, and then determine whether the assessee has discharged the onus. On the aforesaid analysis the Tribunal acted contrary to law in not applying the Explanation to the facts of this case. We would acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reheard if the facts and circumstances of the case required for disposal of the appeal by the Tribunal in conformity with the opinion of the court. After hearing the parties, the Tribunal again came to the conclusion that the imposition of penalty was not justified. So far as the first assessment year is concerned, the Tribunal held: "........ The assessee made the entries relating to the credits in its books of account regularly maintained in the course of its business and produced the same before the Income-tax Officer. These books have not been found to be false or concocted and, in fact, the assessment of the business income of the assessee has been made on the basis of those books. The assessee explained the credits in question to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion could be genuine deposits received and returned in the ordinary course of business. Considering all the facts and circumstances of the case, we hold that the assessee discharged the onus cast on it by the Explanation to section 271(1)(c) of the Act ........." The Tribunal found support for its view from the decision of the Jammu and Kashmir High Court in the case of Addl. CIT v. Sadiq Ali Bros. [1973] 92 ITR 276. In the second assessment year, the Tribunal observed : " .......... In our opinion, the penalty for this year also cannot be sustained for reasons similar to those discussed in the appeal for the assessment year 1960-61 above. The credit in question has been assessed disbelieving the explanation of the assessee. The c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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