Penalty under section 271(1)(c): low returned income triggers a presumption of concealment unless the assessee rebuts it.

The Explanation to section 271(1)(c) applies where returned income is below 80 per cent of assessed income, creating presumptions that the assessed income is correct and that the shortfall results from fraud or gross or wilful neglect. That statutory presumption shifts the burden to the assessee and supports levy of penalty unless rebutted. The settled position had already been affirmed by the Full Bench and approved by the Supreme Court. On that basis, deletion of the penalty was not justified and the question was answered in favour of the Revenue.

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Issues: Whether, in view of the amendment made by the Finance Act, 1964, the Tribunal was justified in deleting the penalty under section 271(1)(c) of the Income-tax Act, 1961, where the returned income was less than 80 per cent of the assessed income.

Analysis: The Explanation to section 271(1)(c) applies when the returned income is less than 80 per cent of the assessed income. In that situation, the legal presumptions operate that the assessed income represents the correct income of the assessee and that the shortfall in the returned income is attributable to fraud or to gross or wilful neglect. The settled position had already been affirmed by the Full Bench and later approved by the Supreme Court.

Conclusion: The Tribunal was not justified in deleting the penalty. The question referred was answered in the negative, in favour of the Revenue and against the assessee.

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