TaxTMI 
TaxTMI 
1971 (8) TMI 74
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....nal's order and the assessee's accounts and in cancelling the penalty under section 271(1)(c) ? " The assessee is an individual and he returned an income of Rs. 5,731 and Rs. 1,359 for the assessment years 1960-61 and 1961-62 respectively. The assessee began the construction of a hotel building at Kasaragod and completed it by the end of December, 1970. The total cost of construction of the building according to his books of account was Rs. 86,081. The Income-tax Officer estimated the cost of construction at Rs. 2,29,460. He arrived at the sum of Rs. 1,13,400 being the excess investment of the assessee in the building not accounted for by him and included the sum as his undisclosed income for the two years, since the source of the fund rem....
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....of the construction of the building and the assessee's estimate of such cost. The Inspecting Assistant Commissioner by his combined order dated March 20, 1964, passed under section 271(1)(c) read with section 274(2) of the Act, imposed a penalty of Rs. 17,000 for 1960-61 and a penalty of Rs. 14,000 for 1961-62. The assessee filed appeals to the Appellate Tribunal. The Appellate Tribunal pointed out that the cost of construction of the building was determined only on the basis of an estimate which varied from Rs. 2,29,460 as determined by the Income-tax Officer to Rs. 1,52,855 as finally adopted by the Appellate Tribunal. It observed that although the assessee's explanation that he had used stones taken from his quarries and the timber from ....
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....he inference that the disputed amount represents income. It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive. However, it is good evidence. Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars." See also our judgment in I.T.R. No. 11 of 1969 dated 17-8-1971. This court in Kunhali Haji v. Commissioner of Income-tax held : " .....the proceedings under section 28 are in the nature of a penal proceeding... The onus of proof is on the department and the d....