1974 (8) TMI 8

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..... 5,000, respectively. Vaiyapuri Pillai looks after the assessee's lands. Vaira Perumal is a lessee of the assessee and Marimuthu Gounder is a lessee of certain lands belonging to the assessee's close relation. In the course of the income-tax proceedings the assessee was asked to produce evidence as to the source and nature of the above credits. The said three persons were examined by the Income-tax Officer. After considering their evidence, the Income-tax Officer came to the conclusion that the amounts represented the assessee's income from undisclosed sources. This finding was confirmed by the Appellate Assistant Commissioner and the Tribunal. Penalty proceedings were initiated against the assessee by the Inspecting Assistant Commissioner....

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....000 on the assessee for the assessment year 1961-62 under section 271(1)(c) of the Income-tax Act, 1961, is valid in law ? " The learned counsel for the assessee strenuously contended that there is no positive evidence in this case to come to the conclusion that the said sum of Rs. 21,000 represented the concealed income of the assessee. The only thing that could be said is that the Inspecting Assistant Commissioner and the Tribunal chose to reject the explanation offered by the assessee and that on the law now well established such mere rejection of the explanation alone is not enough for levying the penalty under section 271(1)(c). We have carefully considered this argument of the learned counsel. It is true that a mere rejection of....

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....ounts borrowed by him from these witnesses cannot be true. It is, therefore, not a mere case of disbelieving the statement of the assessee. But it is really a case where the statement of the assessee has been proved to be false. Both the Inspecting Assistant Commissioner and the Tribunal, therefore, came to the conclusion that the amount represented the concealed income of the assessee. We are unable to see how this finding could be challenged. If really the amount is not the concealed income of the assessee, why should he give such false explanation ? We may assume for the purpose of testing the argument of the learned counsel for the assessee that the amount really represented the concealed income. In such a case, if the assessee gives an....