TaxTMI 
TaxTMI 
1981 (1) TMI 22
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....the penalty of Rs. 17,300 imposed by the IAC of Income-tax by applying the Explanation to section 271(1)(c) of the Income-tax Act, 1961, for the A.Y. 1969-70 ? (2) Whether, on the facts and in the circumstances of the case, the penalty in terms of the Explanation to section 271(1)(c) could be imposed without allowing the assessee a specific opportunity to meet the charge of a deemed concealment of income or furnishing inaccurate particulars of such income ? " The facts giving rise to this reference as get out in the statement of the case are as follows? The assessee is a registered firm carrying on business in groundnuts, cotton seeds and sugar. The accounting period for the relevant assessment year 1969-70 is the year ending Diwali 1....
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....d a penalty of Rs. 56,200 on the assessee by invoking the Explanation to s. 271(1)(c) of the Act. Aggrieved by the order imposing the penalty the assessee preferred an appeal before the Tribunal. The Tribunal upheld the imposition of the penalty but reduced the amount to Rs. 17,300. At the instance of the assessee, the Tribunal has referred the aforesaid questions of law for the opinion of this court. Shri J. W. Mahajan, learned counsel for the assessee, contended that the IAC having held that the charge of having concealed its income or having furnished inaccurate particulars of its income does not lie against the assessee and the Tribunal not having upset the finding of the IAC, the Tribunal was not justified in law in maintaining the ....
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....he effect that whether the assessee could be deemed to be guilty of any of the foregoing two charges within the meaning of the provisions of the Explanation to s. 271(1)(c). He came to the conclusion that the returned income being less than 80% of the correct income the assessee shall be deemed to have concealed his income or furnished inaccurate particulars thereof because he failed to prove that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. The IAC imposed the penalty placing reliance upon the Explanation to s. 271(1)(c) of the Act. The Tribunal also did not set aside the finding of the IAC that the charge of concealment of income or furnishing inaccurate particulars of i....
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.... the absence of such a finding there was no question of imposing penalty on the assessee for concealment of income or furnishing inaccurate particulars of income and the Explanation to s.. 27l(1)(c) of the Act was not attracted to such a case. The contention of the learned counsel for the revenue, that after the introduction of the Explanation to s. 271 (1)(c) of the Act in a case where the total income returned by any person is less than 80% of the correct income, i. e., income assessed, it is not necessary in the penalty proceedings to record a finding that the assessee has concealed his income or furnished inaccurate particulars of income and that in such a case, on the basis of the assessment order, penalty can be imposed if the asse....
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....ver, it is good evidence. Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. " The language of s. 271(1)(c) of the Act has not been changed. Therefore, before an assessee is held liable for the imposition of penalty under s. 271 (1)(c) of the Act it has to be independently found in the penalty proceedings that the disputed amount represented income. After it is held that the amount which was concealed by the assessee was the income of the assessee and if the quantum of the concealed income falls within the Explanatio....