TaxTMI 
TaxTMI 
1993 (3) TMI 12
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....sessee for the assessment year 1968-69 ?" The assessee is an individual and is a partner in two firms, Messrs. Agarwal Fabrications and Messrs. K. C. Agarwal and Sons. The assessment year is 1968-69 and the relevant previous year is the calendar year 1967. In his return originally filed on April 25, 1969, the assessee had declared a total income of Rs. 8,479. Subsequently, he filed a revised return on July 28, 1969, declaring a total income of Rs. 24,292. It may be mentioned that in the order of the Inspecting Assistant Commissioner of Income-tax, he has mentioned that Rs. 24,292 shown by the assessee in the revised return was a loss return. During the course of the assessment proceedings, the Income-tax Officer inquired of the assessee to explain the nature and source of certain loans shown in his capital account in the books of Messrs. Agarwal Fabrications. The Income-tax Officer was not fully satisfied about the assessee's explanation regarding the nature and source of the entire amount of loan alleged to have been taken by the assessee. He, therefore, made an addition of Rs. 56,200 while framing the assessment under section 143(3) of the Act. Simultaneously, he initiat....
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....cting Assistant Commissioner of Income-tax and we do not find anything in the said order which would point to any finding by the Department that there was any attempt to conceal by the assessee. Even the findings of the Tribunal, while upholding the addition of Rs. 26,050 may not help, as the Department has merely proceeded on the basis that the explanation advanced by the assessee was not satisfactory and an inference could be drawn that the amount was the assessee's income from undisclosed sources. On the facts and circumstances of the case, therefore, we are satisfied that this is not a fit case for levy of penalty under section 271(1)(c). We would accordingly quash the order of the Inspecting Assistant Commissioner of Income-tax and direct the Income-tax Officer to refund the amount of penalty, if any, collected from the assessee. In the result, the appeal succeeds and is allowed. " In its application made under section 256(1) of the Act, the Revenue requested the Tribunal to draw up a statement of the case and refer the following question to this court : "Whether, on the facts and the circumstances of the case and having regard to the fact that the presumption arising un....
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....the assessee. According to him, since the Inspecting Assistant Commissioner had not indicated that he was going to invoke the provisions of the Explanation to section 271(1)(c) of the Act, the Tribunal was fully justified in cancelling the penalty in the manner it did. He further submitted that even assuming for the sake of argument that the provisions of the Explanation to section 271(1)(c) of the Act could be invoked, it is submitted that they can be invoked only if the main provisions of section 271(1)(c) of the Act are attracted. However, since, in the instant case, the Tribunal has clearly held that the provisions of the main section 271(1)(c) of the Act are not attracted, the penalty imposed by the Inspecting Assistant Commissioner cannot be supported by referring to the Explanation to section 271(1)(c) of the Act. He fervently argued that, if need be, the question may be reframed, as the question as, it stands, is loaded in favour of the Revenue. In this connection, he placed before us a decision of this court in the case of CIT v. P. M. Shah [1993] 203 ITR 792 in Income-tax Reference No. 237 of 1977, dated November. 9, 1992, to which both of us were parties and pointed out ....
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....om April 1, 1964, reads 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 the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from 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." On a proper reading of the aforesaid provisions in the light of the aforesaid two decisions of the Supreme Court in CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 and CIT v. K. R. Sadayappan [1990] 185 ITR 49, it is quite apparent that the assessee was liable to penalty under section 271(1)(c) of the Act. We are not inclined to accept these submissions made on behalf of the assessee that when the main provisions of section....