1977 (2) TMI 9

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....iness in biris and some other articles. For the assessment year 1968-69 it filed a return showing an income of Rs. 38,200. The return was accompanied by a copy of the trading account, profit and loss account and the balance-sheet. During the course of examination of books of account the Income-tax Officer noticed some defects in the account books. The attention of the assessee was drawn to the defects by a letter dated August 14, 1969, and it was asked to explain the various points regarding the defects. On September 22, 1969, the assessee filed a revised return showing an enhanced income of Rs. 46,992 and on the same date it also submitted a letter to the Income-tax Officer explaining how the mistakes in the account came into existence. ....

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....ered the four items of additions made by the Income-tax officer for the purpose of considering whether the penalty levied in the instant case was sustainable in law or not. As the facts stand, it is not disputed by the assessee that this case attracts the Explanation to section 271(1)(c) of the Act and the Tribunal approached the case on that basis holding that the burden lay on the assessee to prove that the failure to return the correct income did not arise out of any fraud or gross or wilful negligence on the part of the assessee. Regarding the addition of Rs. 10,000 in the biri account the Tribunal, after considering the materials on record, has observed as follows : "We may keep in our mind that the assessee has been asked to prove....

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....enalty has been levied for concealment of income but the second item of charge is regarding furnishing of inaccurate particulars of income and on that ground penalty is not sustainable on this charge. The Tribunal has observed that there is no evidence for suppression of sales and there is prima facie only under-valuation of closing stock but the Income-tax Officer has gone by suppression of sales for which there is no evidence. The Tribunal has further observed that there was no intentional under-valuation of closing stock. Ultimately, the Tribunal after reviewing the materials on record has observed : "We will, therefore, hold that the assessee cannot be held as grossly negligent or has been wilfully negligent." That being the positio....