AI Drafter 
TaxTMI 
TaxTMI 
2004 (12) TMI 45
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....in deleting the penalty imposed by the Income-tax Officer under section 271(1)(c) read with the Explanation thereto and sustained by the Commissioner of Income-tax (Appeals)? Whether, the finding of the Appellate Tribunal in deleting the penalty imposed under section 271(1)(c) read with the Explanation thereto is not unreasonable and or perverse?" The assessment year is 1975-76 and the relevant accounting period is the financial year ended on March 31, 1975. The respondent-assessee filed a return of income on July 18, 1975, declaring the total income at Rs. 1,25,210. The assessment came to be finalised on September 18, 1978, under section 143(3) read with section 144B of the Act computing the total income at Rs. 5,49,170. The Assessin....
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....ccepted the explanation tendered by the assessee and cancelled the penalty allowing the appeal filed by the assessee. Mrs. M. M. Bhatt, learned standing counsel for the applicant-Revenue, has submitted that the Tribunal erred in holding that the assessee had discharged the onus. She submitted that the Assessing Officer had pointed out four specific instances on the basis of which a lump sum addition of Rs. 2 lakhs was made in the assessment order. That in these circumstances, the assessee was required to explain each and every discrepancy to the satisfaction of the authority and on failure to do so was liable to be visited with penalty under section 271(1)(c) of the Act. Though served, there is no appearance on behalf of the respondent-a....
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....ddition of Rs. 1 lakh. The reason for making the lump sum addition was, as stated, the fall in gross profit and the various defects found in the books of account resulting in rejection of the books of account by invoking the provisions of section 145(1) of the Act. In the case of CIT v. S.P. Bhatt [1974] 97 ITR 440 (Guj), the facts were that the Income-tax Officer did not accept the figures of profit appearing from the books maintained by the assessee because no quantitative stock account was maintained, a majority of sales were not supported by vouchers and the gross profit disclosed in the books of account appeared to be low. However, it was not the case of the Income-tax Officer that any particular entries in the books of account were....
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.... the prosecution has to establish the guilt of the accused beyond reasonable doubt nor is it of the same nature as the burden which lies upon the Revenue in establishing that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. It is a burden akin to that in a civil case where the determination is made upon preponderance of probabilities. It is also not necessary that any positive material should be produced by the assessee in order to discharge this burden which rests upon him. The assessee may claim to have discharged the burden by relying on the material which is on record in the penalty proceedings, irrespective of whether it is produced by him or by the Revenue. If it can be said ....
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....s of the seller are concerned, that was a matter for the said firm to explain and for that the assessee could not be said to have committed any default so as to be visited with penalty. In the light of these findings, the Tribunal has cancelled the penalty. In the case of CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 the Supreme Court has laid down that the Explanation to section 271(1)(c) of the Act raises a rebuttable presumption and the initial burden of discharging the onus of rebuttal is on the assessee. Once that initial burden is discharged, the assessee would be out of the mischief unless further evidence was adduced. That the rebuttal must be on materials relevant and cogent. It is for the fact-finding body to judge the releva....