TaxTMI 
TaxTMI 
2002 (8) TMI 97
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....ng question: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty under section 271(1)(c) of the Income-tax Act, 1961 to the extent it was levied by reference to the addition of Rs. 19,000 made in the assessment?" The facts of the matter, as noticed by the learned Tribunal, are as follows: The assessee was a registered firm carrying on the business of jewellery. The firm consisted of two partners, namely, Smt. Nand Rani Khanna, and, her son, Shri Ramesh Chand Khanna. Penalty for a sum of Rs. 18,419 was levied upon the assessee by the Inspecting Assistant Commissioner of Income-tax (in short the "IAC"). Two additions of Rs. 18,419 for unaccounted stock of precious stone....
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....sessee-firm. It is true that the explanation was found to be false, but falsity of the explanation by itself is not sufficient to attract penalty under section 271(1)(c) in view of the decision of the Supreme Court in Anwar Ali's case [1970] 76 ITR 696 . . . ." Ms. Prem Lata Bansal, learned counsel appearing on behalf of the Revenue, would submit that the learned Tribunal completely erred in arriving at the aforementioned finding in so far as it failed to take into consideration the fact that the provisions of section 271(1)(c) of the said Act had undergone an amendment in terms whereof the burden of proof was on the assessee. Learned counsel would contend that the decision of CIT v. Anwar Ali [1970] 76 ITR 696 (SC), whereupon relianc....
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....he returned income is less than 80 percent of the assessed income, the presumption is raised against the assessee that the assessee is guilty of fraud or gross or wilful neglect as a result of which he has concealed the income but this presumption can be rebutted. The rebuttal must be on materials relevant and cogent. It is for the fact-finding body to judge the relevancy and sufficiency of the materials. If such a fact-finding body, bearing the aforesaid principles in mind, comes to the conclusion that the assessee has discharged the onus, it becomes a conclusion of fact." This aspect of the matter has again been considered in Addl. CIT v. Jeevan Lal Sah [1994] 205 ITR 244 wherein the apex court overruled its earlier judgment of CIT v. ....
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....oceedings may be good evidence but is not conclusive. (d) Before penalty can be imposed, the entirety of the 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. That was a case where an undisclosed cash deposit was discovered and the explanation offered by the assessee in that behalf was rejected but the Revenue did not adduce any further material from which it could be inferred that the assessee had concealed the particulars of his income or had deliberately furnished inadequate particulars in respect of the same or that the disputed amount was a revenue rece....
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....the returned income is shown to be less than 80 percent of the total income assessed, the presumption comes into play and then the burden shifts to the assessee to establish that his failure to return the correct income was not on account of any fraud or gross or wilful neglect on his part. If he fails to establish the same, the presumption will become a finding-and it would be open to the authority to levy the penalty. But if the assessee establishes that his failure to return the correct income was not on account of any fraud or any gross or wilful neglect on his part, it is evident, no penalty can be levied. Even after the amendment of 1964, the penalty proceedings, it is evident, continue to be penal proceedings. Similarly, the quest....
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....any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section.' From the facts found by the Revenue, the assessee had shown only a total income of Rs. 3,113 and subsequently, the raiding party seized wristwatches worth Rs. 87,455. Thus the value of that income (watches) was included in the assessable income of the assessee. Therefore, the total assessable income of the assessee came to Rs. 90,568 whereas the returned income was only Rs. 3,113 which was certainly less than 80 per cent. of the assessed income and, as such, the Explanation applied. Accordingly, the Revenue has discharged the....