2003 (1) TMI 60

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....r section 271(1)(c) of the Income-tax Act, 1961?" During the course of operation under section 132 of the Act on November 30, 1974, a Mercedez car was found parked in the premises of the assessee. The registration book, a servicing bill and a blank transfer form signed by the owner of the vehicle were also recovered from the premises. As the assesses did not disclose the source of income by which he had acquired the said vehicle, an amount of Rs. 65,000, representing the investment, was added to the total income of the assessee and a notice under section 274 read with section 271 was issued to show cause as to why penalty under section 271(1)(c) should not be levied on the assessee. The addition to the total income in respect of the inve....

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.... applicable to the facts of the case and that the penalty was to be examined within the framework of the main provisions of section 271(1)(c). It was held that the onus was on the Income-tax Officer to establish directly or indirectly that the investment in the car involves an income of the year under review which the assessee had not disclosed. He, therefore, cancelled the entire penalty of Rs. 56,000. The Tribunal, on the basis of the material on record, held that the Commissioner (Appeals) was in error in cancelling the penalty. According to the Tribunal, the Explanation was attracted and it was for the assessee to lead necessary evidence so as to properly rebut the presumption. The Tribunal found that the income used in purchase of t....

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....penalty of Rs. 56,000 and not mere Rs. 31,000. There can be no dispute about the fact that the Explanation to section 271(1)(c) is a part of section 271 and, therefore, it applied notwithstanding that it may not have been separately mentioned. This point is, now, concluded by the decision of the Supreme Court in K. P. Madhusudhanan v. CIT [2001] 251 ITR 99. It is, however, clear that the presumption is not irrebutable and from the material on record, the assessee can show that there was no concealment. The assessee, by his two letters referred to hereinabove, admitted that he had purchased the car for Rs. 31,000 and, therefore, that was a valid basis on which the Tribunal held that there, admittedly, was concealment of income to the tune....