Penalty under section 271(1)(c): statutory presumption applied where returned income was lower, and no question of law arose.

Where returned income is substantially lower than assessed income, the Explanation to section 271(1)(c) shifts the burden to the assessee to show that penalty is unwarranted. The assessee failed to appear and did not discharge that burden, so the statutory presumption supporting concealment penalty applied. A challenge to the assessed enhancement could not be examined in reference proceedings when it had not been raised at the proper stage. On those facts, the High Court held that no question of law arose from the Tribunal's order and the request for reference under section 256(2) failed.

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Issues: Whether, on the facts found, any question of law arose out of the Tribunal's order affirming penalty under section 271(1)(c) of the Income-tax Act, 1961, so as to justify a direction for reference under section 256(2) of the Act.

Analysis: The returned income was substantially lower than the assessed income, attracting the statutory Explanation to section 271(1)(c) applicable to the relevant assessment year. In that situation, the burden lay on the assessee to show that no case for penalty was made out. The assessee did not appear or discharge that burden, and the penalty was imposed on the basis of the statutory presumption arising from the shortfall between returned and assessed income. A challenge to the correctness of the assessed enhancement could not be examined in these reference proceedings when it had not been raised at the relevant stage.

Conclusion: No question of law arose from the Tribunal's order, and the request for reference under section 256(2) failed.

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