1987 (3) TMI 94

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....J.-As directed by the High Court in I. T. A. No. 1106 of 1976, the Income-tax Appellate Tribunal has referred the following question : " Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the Appellate Assistant Commissioner was right in cancelling the penalty of Rs. 10,000 imposed under section 271(1)(c) of the Income-tax Act, 1961 ? ....

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....peal preferred by the Revenue was dismissed by order dated July 24, 1975. It was, thereafter, that the Department came to this court by means of an application under sub-section (2) of section 256 of the Income-tax Act. The application was allowed and the Income-tax Appellate Tribunal was directed to draw up a statement of the case and refer the question to the High Court for its opinion. Th....

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.... illegally omitted to consider the Explanation to section 271(1)(c). It may be true that the addition was made on the basis of an estimate but that did not mean that penalty could not be levied if the assessee failed to prove that the difference between the income returned and the income assessed was not due to any fraud or wilful negligence on its part. In Addl. CIT v. Lakshmi Industries and C....

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....7] 30 Taxman 546H, 546-I, the Supreme Court was called upon to consider similar question. It held: " The effect of the Explanation to section 271, after amendment by the Finance Act, 1964, was that where the total income returned by any person was less than 80 per cent. of the total income assessed, the onus was on such person to prove that the failure to file the correct income did not arise f....