1987 (6) TMI 40

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.... a sum of Rs. 45,323,99 as escaped income before the Income-tax Officer for the assessment year 1969-70, the Income-tax Appellate Tribunal is right in law in cancelling the penalty under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 1969-70 ? 3. Whether, on the facts and in the circumstances of the case, and in view of the confirmation of the orders of penalty under section 271(1)(c) of the Income-tax Act, 1961, for the assessment years 1962-63 to 1967-68, the Income-tax Appellate Tribunal is justified in cancelling the penalty under section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 1969-70, giving the assessment year a separate treatment ? The Revenue is the applicant. The respondent herein is an assessee to income-tax. The assessment year involved is 1969-70. In this reference, the controversy is regarding the penalty levied for the said year under section 271(1)(c) of the Income-tax Act. The assessee (firm) filed a return on November 4, 1969, showing an income of Rs. 1,62,742. During the course of the assessment proceedings, inflations in the revenue account and omission in sales came to light. The assessee, by annexure letter da....

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....Tribunal proceeded to state as follows: " We find that this point had not been dealt with by the Inspecting Assistant Commissioner. There is no basis for holding that the assessee had Rs. 33,000 at the end of the accounting year. We asked whether in the subsequent year this amount was brought in as cash balance brought forward with the concurrence of the Income-tax Officer. We are told that no such amount was brought forward and there was no concurrence of the Income-tax Officer on that point. In the earlier years wherein we have confirmed the penalties, the extent of the concealed income was immaterial for the quantification of penalty. Even if Re. 1 is found to have been concealed, the minimum penalty has to be imposed. But for 1969-70, each rupee alleged to be concealed has to be proved to be so. We do not find any evidence that there was a cash balance of Rs. 33,000 and it could be taken as part of the unaccounted investment. So this amount has to be deducted from the concealed income. That leaves Rs. 1,309 only. 21. Out of the amount of Rs. 78,191 which had been treated as an investment of this year; there was an investment in a firm, Bandra Tea Mart, (being) repayment of ....

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....rived at by the above method, It is only one of the methods to quantify the correct income. In such circumstances, it cannot admit of any doubt that the income offered can be added for the purpose of arriving at the assessable income for the periods in question. That has, admittedly, been done in the instant case. But the crucial question that arises for consideration is whether, on the facts disclosed in the case penalty is exigible on the said income offered for assessment. On the facts of the case, the Appellate Tribunal held that for the years 1962-63 to 1967-68, there is ample evidence to show that the assessee has concealed income. The levy of penalty for the said years was upheld. At the same time, in considering the totality of the facts and circumstances, the Appellate Tribunal came to the conclusion that the position is slightly different in the assessment year 1969-70. After adverting to the total investments, the cash balance available and the total amount available with the assessee, it came to the conclusion that the id concealment " of income for the year 1969-70 cannot be taken as proved and, on the facts of the case, no penalty is exigible. Prima facie, the findi....

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....re distinct and different from assessment proceedings. The findings in the assessment proceedings are not conclusive but are relevant. The entire materials available should be considered afresh by the authorities before imposing the penalty. Even after the addition of the Explanation to section 271(1)(c), conscious concealment is necessary. The Explanation provides only a rule of evidence raising rebuttable presumption in certain circumstances. No substantive right is created or annulled thereby. The substantive law relating to levy of penalty is preserved. The initial burden of proof is cast on the assessee to displace the presumption arising in certain cases. The assessee can discharge the onus, either by direct evidence or circumstantial evidence, or both. The cumulative effect of all the facts should be taken into consideration. The assessee is entitled to show and establish by the material and relevant facts which may go to affect his liability or the quantum of penalty. As to whether there is concealment to make the penalty exigible is normally a question of fact. Whether the burden of proof in a given case has been discharged on a set of facts, is also a question of fact. To....