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TMI Blog1994 (8) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... before the CIT (Appeals), the first addition was reduced to Rs. 6 lakhs whereas the second addition as above was reduced to Rs. 85,000. The Assessing Officer initiated penalty proceedings under section 271(1)(c) for concealment of income and furnishing of inaccurate particulars. In the impugned penalty order, he discussed in detail the various contentions of the assessee against levy of penalty and negatived the same. Finally, he held that the assessee was guilty of concealing its particulars of income to the extent of Rs. 6,85,000 as above. The Assessing Officer thus levied a penalty of Rs. 3,47,110 at the minimal level. 4. The assessee preferred an appeal before the CIT (Appeals). He discussed the detailed facts of the case and also the various contentions raised by the assessee before him. Finally, he agreed with the Assessing Officer that the assessee had, in fact, concealed its particulars of income and in that view, upheld the penalty. 5. Before us, the assessee has raised a legal issue that the imposition of penalty under section 271(1)(c), by resorting to the provisions of Explanation 1 to the said section without giving notice that the Explanation was sought to be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a detailed discussion of the matter in its judgment in the case of Drapco Electric Corpn. The Gujarat High Court held as follows : "It is a principle of law in respect of all rebuttable presumptions that ordinarily such presumptions fall within the realm of the rule of evidence. If fact A is inherently relevant in proving the existence of fact B and to any rational mind it would bear a probative or persuasive value in the matter of proving the existence of fact B, then a rule prescribing either a rebuttable presumption or an irrebuttable presumption in that behalf would be a rule of evidence. On the other hand, if fact A is inherently not relevant in proving the existence of fact B or has no probative value in that behalf and yet a rule is made prescribing a rebuttable or an irrebuttable presumption in that connection, that rule would be a rule of substantive law and not a rule of evidence. Therefore, in dealing with the question as to whether a given rule prescribing a conclusive presumption is a rule of evidence or not, we cannot adopt the view that all rules prescribing irrebuttable presumptions are rules of substantive law. One can answer the question only after examining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the ITAT, Bangalore Bench in the case of Mandli Hanumanthappa Setty. 9. it is thus found that as against the abovementioned decision of the Bombay High Court as cited by the assessee, two different High Courts as well as this Bench of the ITAT have already taken the view that the Explanation to section 271(1)(c) can be resorted to at any stage of the proceedings and that it is not necessary to make a mention of the same in the show-cause notice issued by the Assessing Officer. This is the position with regard to the Explanation which existed during the period from 1-4-1964 to 31-3-1976. In that Explanation, there was a presumption of concealment if the difference between the returned and the assessed income (after making certain adjustments in respect of expenses disallowed) was more than 20 per cent of the assessed income. The Bombay High Court, therefore, considered the Explanation to be having a substantive existence apart from the provisions relating to imposition of penalty on concealment as such, and held that inasmuch as the Explanation itself provided for penalisation of the assessee apart from the proof of concealment, a specific mention of the said Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re contested therein. The facts of the case have been thoroughly discussed in the said order of ours. The following findings with regard to the maintenance of the accounts of the assessee and claims of the expenses under consideration have however been arrived at in the said appellate order : "...The Bills produced were duplicate and written in ink which contained some internal disturbing evidence. one bill (No. 624), dated 28-3-1990, for Rs. 7,000 did not tally with the original maintained by M/s. Jameel Pasha Co. That was a bill in favour of M/s. Chacko Associates. It appears one of the partners tried to correct the name by striking off the earlier one to writ the name of Prasanna Enterprises" (para 10) "With regard to other carbon copies of vouchers they did not dovetail with the accounts of M/s. Jameel Pasha Co. All these go to show that the assessee had managed to procure bills of purchases made by some other third party to support its claim in the assessment." (para 11) "The observations made by the ACIT in regard to purchases made from M/s. Jameel Pasha Co., had been put to the assessee and its explanation had been sought. No explanation worth mentioning had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elating to the same and material to the computation of the total income of the assessee have been disclosed. The Tribunal has already given sufficient margin in respect of allowability of the expenses. Whatever expenses have ultimately been considered by the Tribunal to be disallowable are on account of inflation of the expenses resorted to by the assessee as found out by the Tribunal. The decision of the Allahabad High Court in the case of Devi Dayal Aluminium Industries (P.) Ltd. would not, therefore, apply to the present case inasmuch as this is a clear case of explanation offered by the assessee not being bona fide. 12.1. In the case of Mediratta Engg. Corpn., the Delhi High Court held penalty to be not leviable mainly on consideration of the fact that the ratio of Nickel consumption, alloy position and gross profit compared favourably with those in earlier years. So far as the present case is however, concerned, the Tribunal, even after taking into consideration expenses under the same head for the immediately preceding year and even allowing a margin of 10 per cent thereupon, considered the balance claim of expenses to be completely unsubstantiated. We are, therefore, of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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