1979 (4) TMI 6

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....r the assessment year 1970-71, the assessee which was a partnership firm, returned an income of Rs. 17,480. The ITO did not accept the return and made some additions. The assessee went up in appeal, but failed. The assessee then went up to the Tribunal. Ultimately, the additions of Rs. 23,500 on account of unexplained retirement of certain hundis was upheld by the Tribunal. Other additions were deleted by the Tribunal. During these proceedings, the ITO referred the case to the IAC for drawing up penalty proceedings. The IAC issued the requisite notice and after hearing the assessee imposed a penalty of Rs. 25,840 on the footing that that much amount represented the concealed income. He held that the charge of concealment of income has been ....

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.... one is covered by the other. On the facts of the case, we have to hold that the origin of the amount of Rs. 23,500 (in round figures) which was utilised by the assessee-firm in the retirement of hundis on September 10, 1969, remains unexplained." On the penalty side, the Tribunal recorded the following finding: " At paragraph 6.7 above, we have held that the explanation furnished by the assessee about the origin of Rs. 23,636 utilised by the assessee for retiring hundis on September 10, 1969, had not been satisfactorily explained and, therefore, the amount (Rs. 23,500 in round figures) could reasonably be treated as the assessee's income from undisclosed sources. But we have also considered the possibility of the said unrecorded amou....

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....ances, not in accordance with law. On facts, the Tribunal has expressed its view. It has stated that they have also considered the possibility of the alternative plea raised by the assessee but since the Tribunal was of the opinion that the burden of proving that the amount represented the concealed income was on the revenue, it cannot be said that the ultimate conclusion was not influenced by this burden of proof. If the Tribunal had considered the question of burden of proof in its true perspective, it cannot be said to what ultimate conclusion it may have reached on facts. In this view, the cancellation of the penalty was vitiated by an error of law. The question referred to us hence cannot be answered appropriately unless a fresh fin....