1973 (11) TMI 26

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....f Income-tax, Kanpur, the Income-tax Appellate Tribunal, Delhi, has submitted this statement of the case and the following question of law for the opinion of this court: "Whether, having regard to the scope and operation of the Explanation to section 271 (1)(c) of the Act, the charge that had been framed upon the assessee for levy of penalty under Explanation to section 271(1)(c) was correct ?"....

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....in respect of some cash credits the assessee had led no evidence and in respect of others the evidence led by it was not acceptable. He, accordingly, held that all the cash credits had rightly been treated as the assessee's income inasmuch as he had not included this income in its return and was guilty of concealment. He, accordingly, levied a penalty of Rs. 35,754. On appeal the Income-tax Appell....

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....s inasmuch as it had placed no other material on the record except that the assessee's explanation with regard to the cash credits was not believable. In the course of arguments the department sought to rely upon the Explanation to section 271(1)(c) which has been added with effect from 1st April, 1964. According to that Explanation, where the total income returned by any person is less than 80....

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....al has taken a correct view. In order to determine as to whether the income returned by an assessee is less than 80% of the income assessed, any expenditure incurred bona fide by the assessee for purposes of making or earning income included in the total income which has been disallowed as a deduction has to be deducted. In other words, the income assessed by the Income-tax Officer has to be repro....