TaxTMI 
TaxTMI 
1978 (7) TMI 17
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....e existing in the assessee's account books in respect of six other firms. This addition was reduced on appeal. On further appeal, the Tribunal upheld the inclusion in relation to two cash credit items, namely : (1) of Rs. 16,350 relating to Sri Ram Lal, leather merchant, Agra, (2) of Rs. 8,510 of Chimanlal, leather merchant, Agra. Thus, the inclusion as income from other sources was reduced from Rs. 71,834.95 to Rs. 24,860. The Tribunal also upheld the inclusion of Rs. 8,423 on account of bonus received by the assessee as a result of the devaluation of Indian currency. This receipt was held to be clearly revenue in nature and includible in the total income of the assessee. Meanwhile, the IAC initiated penalty proceedings, and ul....
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....owing questions of law for our opinion: " (1) Whether, on the facts and circumstances of the case, the Tribunal was right in cancelling the penalty levied under section 271 (1)(c) of the Act of 1961 ? (2) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the Explanation to section 271 (1)(c) of the Act was not applicable to the instant case ? " The Tribunal has dealt with the case also on the footing that the Explanation was applicable. We may at first deal with this aspect. Ultimately, three items were added as income from undisclosed sources : &nb....
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.... On the penalty side, in respect of the first two items, the Tribunal observed that there was nothing to show that the assessee got back the moneys in cash after making payments by bearer cheques. It was neither a case of fraud, nor of gross or wilful negligence even though the explanation offered by the assessee was disbelieved. In respect of the third item relating to bonus it was observed that these amounts were received as a result of devaluation of Indian currency. The assessability of such a receipt was a highly debatable matter. It was not clear whether such receipts are incidental to trade or business. The explanation of the assessee in this respect was believable, and hence the assessee was not guilty of fraud or gross or wilful....
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....y have been disallowed as deduction. In such cases, the concealment or the furnishing of inaccurate particulars of income is presumed to be in existence. The assessee has been given a locus poenitentiae to get out of the presumption by affirmatively establishing that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. The Explanation does not confer any discretion on the assessing authorities to invoke it or not. It automatically applies to cases where the returned income is less than 80 per cent. of the assessed income. The consequence follows as a matter of law. The burden of proving lack of fraud or gross or wilful negligence is on the assessee. If he fails, the presumption....