TaxTMI 
TaxTMI 
1994 (2) TMI 22
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the finding of the Tribunal that the assessee has not discharged the burden is against the evidence and material on record ? 2. Whether the finding of the Tribunal that the penalty was rightly imposed is reasonable and sustainable or supported by any evidence on record ? " The relevant assessment year is 1972-73. The assessee-firm filed a return of income declaring its total income at Rs. 63,830 on July 19, 1972. Copies of the trading account, the profit and loss account, etc., were filed along with the return. While scrutinising the books of the assessee, the Income-tax Officer found that the total amount of interest credited to the accounts of the partners of the firm was Rs. 66,519. Out of this amount, Rs. 44,030 were credited to th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the initial burden cast upon it under the provisions of the Explanation to section 271(1)(c) of the Act. At the hearing of this reference, it was urged on behalf of the assessee that the Explanation to section 271(1)(c) was not attracted in the instant case because on its true construction the total income returned by the assessee would not be less than 80 per cent. of the total income assessed as reduced by the expenditure incurred bona fide by the assessee as envisaged in the said Explanation. The Explanation to section 271(1)(c) as it stood at the relevant time read as under : " 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... for some reason disallowed as deduction. The Explanation for the purpose of reducing the assessed income takes care of all the expenditure incurred bona fide by the assessee and need not be confined to deductions as are claimable under sections 30 to 43 of the Act. Similar view is taken by the Allahabad High Court in Addl. CIT v. Modi Rolling Shutter Industries [1977] 110 ITR 77 and Addl. CIT v. K. S. M. Wazir Mohd. and Sons [1977] 110 ITR 798, and the Gauhati High Court in Sundaram Mahadeo v. CIT [1977] 109 ITR 39. In the instant case, the income returned by the assessee was Rs. 63,830 and it was assessed by the Assessing Officer at Rs. 1,01,674 and after appeal, finally at Rs. 98,369. It is not at all disputed that the interest paid to ....