Burden of proof under penalty for concealment turns on the statutory presumption in section 271(1)(c).

The Explanation to section 271(1)(c) of the Income-tax Act creates a statutory presumption of concealment where returned income falls below the prescribed percentage of assessed income, shifting the burden to the assessee to prove that the shortfall did not arise from fraud or gross or wilful neglect. The Tribunal had taken the view that the Revenue must independently prove concealment and that a false or unexplained return was not enough. The High Court treated the allocation of burden and the effect of the Explanation as a question of law and directed the Tribunal to state the case and refer the question for opinion.

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Issues: Whether the Tribunal was right in deleting the penalty under section 271(1)(c) of the Income-tax Act, 1961, and whether the Explanation to that provision shifted the burden on the assessee in the facts of the case.

Analysis: The assessee's returned income was below the statutory threshold contemplated by the Explanation to section 271(1)(c). The Tribunal had deleted the penalty on the view that the revenue must independently establish concealment and that falsity or absence of explanation, by itself, was insufficient. The Explanation, however, created a statutory presumption of concealment where returned income fell short of the prescribed percentage of assessed income, unless the assessee proved that the failure to return the correct income did not arise from fraud or gross or wilful neglect. The core question was therefore the correct allocation of the burden of proof and the legal effect of the Explanation.

Conclusion: The question of law arose and the Tribunal was required to refer it; the application was allowed and the Tribunal was directed to state the case and refer the question for opinion.

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