TaxTMI 
TaxTMI 
2001 (8) TMI 8
X X X X Extracts X X X X
X X X X Extracts X X X X
....-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact, in holding that this is an agreed assessment on the basis of which penalty is not leviable ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact, in holding that penalty cannot be levied as the Assessing Officer in the proposal under section 271(1)(c) had not refer red to Explanation 1(B) to section 271(1)(c) ?" The assessee is in appeal by special leave. For the assessment year 1986-87, the assessee, which is a partnership firm, filed a return of income which stated that its total income was Rs. 6,76,890. The assessment was completed determining the total income of the assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sum of Rs. 93,000 as unexplained investment. Penalty proceedings were then initiated against the assessee under section 271(l)(c) of the Income-tax Act, 1961. The Assessing Officer found the assessee's explanation in regard to the loans to be unacceptable and noted that it had itself offered the addition of Rs. 93,000. Applying Explanation 1(B) of section 271(l)(c), the Assessing Officer imposed upon the assessee the penalty of Rs. 37,975. The appeal filed by the assessee was dismissed. The assessee then preferred an appeal to the Income-tax Tribunal. The Tribunal allowed the appeal. Arising out of the order of the Tribunal the questions noted above were placed for the consideration of the High Court. The High Court was not persuaded to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... person fails to offer an explanation or offers an explanation which is found by the Income-tax Officer or the Appellate Assistant Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed : Provided that nothing contained in this Explanation shall apply to a case referred to in clause (B) in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bona fide and all the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at delivered the judgment in the case of P. M. Shah [1943] 203 ITR 792 followed it in the case of CIT v. Dharamchand L. Shah [1993] 204 ITR 462 (Bom). It said : ". . . in the absence of invoking the Explanation specifically, the burden would remain on the Revenue to bring the assessee's case within the mischief of the main provisions of section 271(1)(c) of the Act." We find it difficult to accept as correct the two judgments aforementioned. The Explanation to section 271(1)(c) is a part of section 271. When the Income-tax Officer or the Appellate Assistant Commissioner issues to an assessee a notice under section 271, he makes the assessee aware that the provisions thereof are to be used against him. These provisions include the Explanat....