TaxTMI 
TaxTMI 
2000 (11) TMI 44
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.... during a search by the customs authorities. On being asked about the nature and source of the aforesaid sum, he explained it as follows: (i) Loan from Shri Babu Ram on 6-3-1966. Rs. 15,000 (ii) Loan from Jain Bullion Company, Meerut, against ornaments pledged by the assessee on 10-3-1966. Rs. 10,000 (iii) Sale proceeds of silver coins sold to &....
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....s further stated that Shri Babu Ram was produced before the Income-tax Officer and his statement was recorded, where he stated about the source from which the loan was given. Mere disbelief of the evidence was not sufficient for attracting penal consequences. The Tribunal was of the view that mere rejection of the explanation or disbelief of the Tribunal in the quantum appeal was not sufficient to prove concealment. There has to be some positive material or positive circumstance to suggest that the assessee had concealed his income. It was held that, on consideration of the facts and circumstances of the case, no concealment had been proved and, therefore, penalty was directed to be deleted. The Revenue moved for reference under section 256(1) of the Act, which was rejected. But pursuant to the direction given by this court under section 256(2) of the Act, the question, as set out above, has been made. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessee in spite of notice. The primary stand of learned counsel for the Revenue is that the effect of the Explanation added to section 271(1)(c) of the Act has been lost sight of by the Tribun....
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.... imposed merely because the explanation given by the assessee in regard to items in question was not believed to be true. Section 271(1)(c) is attracted where, in the course of any proceedings under the Act, the Assessing Officer or the first appellate authority is satisfied that (a) any person has concealed the particulars of his income, or (b) has furnished inaccurate particulars of such income. The expression "has concealed" and "has furnished inaccurate particulars" have not been defined either in the section or elsewhere in the Act. However, notwithstanding the differences in the two circumstances, they lead to the same effect, viz., keeping off a certain portion of the income. The former is direct while the latter may be indirect in its execution. The word "conceal" is derived from the Latin word "concelare" which implies "to hide". In Webster's New International Dictionary, the word has been equated "to hide or withdraw from observation; to cover or keep from sight; to prevent discovery of; to withhold knowledge of". The meaning of the word, "concealment" as fraud in Shorter Oxford English Dictionary is: "In law, the intentional suppression of truth or fact known, to the ....
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....come is deemed to represent the income in respect of which the particulars have been concealed. As per the proviso to Explanation 1, the onus to establish that the explanation offered was bona fide and all facts relating to the same and material on the computation of his income have been disclosed by him will be on the person charged with concealment. Mere failure to substantiate the explanation is not enough to warrant penalty. The Revenue has to establish that the explanation offered was not substantiated. The proviso to Explanation 1 is concerned only with cases coming under clause (B) of the Explanation where the assessee offered an explanation which he was not able to substantiate. The explanation of the assessee for purposes of the avoidance of penalty must be an acceptable explanation; it should not be a fantastic or fanciful one. As indicated above, the consequence follow as a matter of law. The burden is on the assessee. If he fails to discharge that burden, the presumption that he had concealed income or furnished inaccurate particulars thereof is available to be drawn. The principal logical import of the Explanation is to shift the burden of proof from the Revenue on ....
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.... wherefrom the extra money came. If that was the position and the further presumption was that the assessee was guilty of fraud, then the subsequent presumption followed that the assessee has concealed the income and that can be rebutted only by cogent and reliable evidence. No such attempt in this case was made. In that view of the matter, in our opinion, it cannot be said that, in this case, the Tribunal was justified in rejecting the claim and penalty may be imposed. The presumption raised as aforesaid, that is to say, that the assessee was guilty of fraud or wilful neglect as a result of which the asses see has concealed the income, would be there. This presumption could have been rebutted by cogent, reliable and relevant materials. There was none, at least neither the Tribunal nor the High Court has indicated any. If that is the position, the High Court, in our opinion, was in error in not correctly applying the principles laid down by this court in CIT v. Mussadilat Ram Bharose [1987] 165 ITR 14 (SC), and the principles of law applicable in a situation of this type to the facts of this case and, therefore, the decision is not sustainable.' It is thus clear that the questio....