TaxTMI 
TaxTMI 
2004 (12) TMI 80
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....t in law?" Briefly stated, the facts giving rise to the present reference are as follows: The reference relates to the assessment year 1975-76 in respect of proceeding for imposition of penalty under section 271(1)(c) of the Act. The applicant is an individual who did not maintain any accounts. The original assessment for the year under reference was framed by the Income-tax Officer on September 20, 1975, on a total income of Rs. 12,000. A search took place on November 28, 1976, at the residence of the applicant's father, Sri S.B. Bhatnagar, in which a black diary which was in the handwriting of the applicant, was seized. Amongst other entries, an entry relating to Rs. 10,000 in respect of some transaction with one Lalloo was found. The I....
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....ment year in question, only raised a presumption which is rebut-table. The applicant has given a valid explanation and, therefore, it was upon the Department to prove that the applicant had wilfully concealed the particulars of his returned income. In support of his aforesaid submissions, he has relied upon the following decisions: (i) CIT v. Net Ram Ram Swarup [1973] 88 ITR 213 (All); (ii) CIT v. B.S. Badve [1982] 138 ITR 682 (Bom); (iii) Addl. CIT v. Jeewandas Gyanchand [1983] 144 ITR 881 (MP); (iv) CIT v. Punjab Tyres [1986] 162 ITR 517 (MP); and (v) C.M. Shivamallappa v. CIT [1987] 163 ITR 725 (Karn). Sri A.N. Mahajan, learned standing counsel, submitted that in the present case the original assessment was made on an income of Rs.....
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....ing in clause (c) of section 271(1) of the Act has been omitted and the following Explanation was inserted at the end of sub-section (1): "Explanation.- Where the total income returned by any person is less than eighty per cent, of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particu....
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.... discharge the onus as contemplated in the said Explanation. In the case of K.P. Madhusudhanan [2001] 251 ITR 99, the apex court has held that the Explanation to section 271(1)(c) is a part of section 271. When the Assessing Officer or the Appellate Assistant Commissioner issues a notice under section 271, he makes the assessee aware that the provisions thereof are to be used against him. These provisions include the Explanation. By virtue of the notice under section 271 the assessee is put to notice that, if he does not prove, in the circumstances stated in the Explanation, that his failure to return his correct income was not due to fraud or neglect, he shall be deemed to have concealed the particulars of his income or furnished inaccura....
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.... to be fraudulent or that the Income-tax Officer came to the conclusion that the assessee had made any deliberate false estimate of his income. Moreover, even the additions made by the Income-tax Officer in the estimates of income made by the assessee are so modest, that merely from those additions it cannot be said that the assessee has made any deliberate under-estimation of his income and, therefore, the levy of penalty was not valid. In the present case, there was a search and a black diary was seized, which contained entries relating to transactions resulting in income which was not disclosed in the return and, therefore, the aforesaid decision is of no help to the applicant. In the case of Jeewandas Gyanchand [1983] 144 ITR 881, the ....