AI Drafter 
TaxTMI 
TaxTMI 
2004 (1) TMI 23
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....ssessee had earlier filed a revised return continuing to show the sum of Rs. 2,96,575 as due to sundry creditors. After the aspect was highlighted by the Assessing Officer, the assessee filed yet another revised return accepting the receipt of the sum of Rs. 2,96,575 as having been received on July 27, 1984. The assessee did not account for the other receipt totalling Rs. 46,464 which also formed part of the gross receipt of the assessee. Ultimately, the Assessing Officer completed the assessment adding a sum of Rs. 2,96,575 and a sum of Rs. 46,464 as the income of the assessee. The said assessment became final, the assessee not having appealed against it. The Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Income-tax Act for concealment of the above two sums totalling Rs. 3,43,239. The assessee resisted the penalty proceedings by submitting that he had included the sum of Rs. 2,96,575 as income in his revised return and the Assessing Officer had completed the assessment accepting that position and no occasion for the imposition of penalty based on that addition existed in the case. The sum of Rs. 46,464 could not be brought into account by the ass....
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.... 271(1)(c) of the Act was not justified. Hence, he allowed the appeal and set aside the order imposing the penalty. The Department appealed to the Income-tax Appellate Tribunal. The Tribunal held that the assessee did not offer an explanation at the assessment stage and this is a case to which Explanation 1(A) to section 271(1) was attracted and the explanation offered at the stage of penalty proceedings was not bona fide and that project completion method was not being followed and that all materials enabling the computation of total income of the assessee were not disclosed at the assessment stage. Even if any justification could be found for disclosing the profit on project completion basis under certain circumstances, there was no justification for showing actual receipts as outstanding liabilities due to sundry creditors. As regards the sum of Rs. 46,464, the TDS certificates were obtained by the assessee even as per his books of account on September 18,1985, and though the assessee filed a second revised return on October 10, 1985, the amount was not disclosed. The assessee could have clearly included this income when he filed the second revised return. There was no justif....
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....he relevant accounting year in its second revised return and in that situation, the imposition of penalty was not justified. There was no mens rea and there was no concealment of any material particulars by the assessee and it could not also be said that he had furnished inaccurate particulars in the return. Counsel relied on the decision in CIT v. Suresh Chandra Mittal [2000] 241 ITR 124 (MP) in support. In that decision, the Madhya Pradesh High Court held that once a revised assessment was regularized by the Revenue and once the Assessing Officer had failed to take any objection in the matter, the declaration of income made by the assessee in his revised returns and his explanation that he had done so to buy peace with the Department and to come out of vexation litigation could be treated as bona fide on the facts and in the circumstances of that case and hence, the Tribunal was justified in cancelling the penalty levied by the Assessing Officer and affirmed by the Commissioner of Income-tax (Appeals). The appeal against the decision of the Madhya Pradesh High Court at the instance of the Department was rejected by the Supreme Court in CIT v. Suresh Chandra Mittal [2001] 251 ITR ....
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....ptions which are rebuttable in nature are available to be drawn. The initial burden of discharging the onus of rebuttal is on the assessee. Explanation 1 automatically comes into operation when, in respect of any facts material to the computation of total income of any person, there is failure to offer an explanation or an explanation is offered which is found to be false by the Assessing Officer or the first appellate authority, or an explanation is offered which is not substantiated. In such a case, the amount added or disallowed in computing the total income is deemed to represent the income in respect of which particulars have been concealed. As per the provision of Explanation 1, the onus to establish that the explanation offered was bona fide and all facts relating to the same and material to the computation of his income have been disclosed by him will be on the person charged with concealment. The Assessing Officer is not obliged to intimate the assessee that Explanation 1 to section 271(1)(c) is proposed to be applied. The scheme of the provisions does not provide for such a requirement either directly or inferentially. In Sir Shadilal's case [1987] 168 ITR 705, what the S....
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.... decision of the Patna High Court in CIT v. Nathulal Agarwala and Sons [1985] 153 ITR 292 [FB] relied on by learned counsel for the assessee also does not come to the aid of the assessee in this case. Therein, the Full Bench of the Patna High Court considered the effect of the amendment brought about to section 271(1) of the Income-tax Act and the addition of the Explanation and noticed that the burden had shifted to the assessee from the Department to offer a reasonable explanation for his furnishing an alleged inaccurate particular or concealing a particular income and it was for the Assessing Officer to consider the acceptability or otherwise of that explanation. This position has been adopted by the Supreme Court also in the above quoted decision and, therefore, no support can be derived by learned counsel from the decision of the Patna High Court to contend that it was still for the Department to establish that a particular income had been wilfully concealed or that an inaccurate particular had been deliberately furnished. In the case on hand, as we have noticed, the explanation of the assessee for non-inclusion of the sum of Rs. 46,464, as non-receipt of TDS certificate ev....