TaxTMI 
TaxTMI 
1973 (9) TMI 38
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....s. 23,957 on June 29, 1964. A revised return was filed by the assessee showing an income of Rs. 44,800 on September 13, 1965. The revised return was filed by adding certain in admissible expenses as also profit which had arisen under section 41(2) of the 1961 Act. The Income-tax Officer passed an assessment order on July 24, 1968, assessing the income of the assessee at Rs. 72,610. In the course of the assessment, proceedings for levy of penalty under section 271(1)(c) read with the Explanation were initiated. Since the minimum penalty leviable exceeded Rs. 1,000, the matter was referred to the Inspecting Assistant Commissioner under section 274(2). The Inspecting Assistant Commissioner found that the original return of the relevant assessment year showed an income of Rs. 23,957 while the correct income assessed ultimately was to the tune of Rs. 72,610. As the onus was on the assessee to prove that the income had been understated in the original return not on account of any fraud or gross or wilful negligence and as the assessee was represented all throughout by a qualified income-tax practitioner, it was difficult for the Assistant Commissioner to appreciate how a substantial amou....
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....contumacious conduct, if any, on the part of the assessee in not having disclosed a true income in the original return, it is not correct to state that the filing of the second return is of no consequence at all while considering the liability of the assessee under section 28(1)(c) of the Act. All the facts and circumstances commencing with the filing of the original return and ending with the assessment may be taken as relevant for considering the assessee's liability for penalty under section 28(1)(c). " It is no doubt true that the Madras High Court as well as all the decisions of the different High Courts digested therein dealt with the question of penalty under section 28(1)(c) with reference to revised returns filed under section 22(3) of the 1922 Act. The present case with which we are concerned is a case arising under section 271(1)(c) read with the Explanation. The scope and width of the powers of the Inspecting Assistant Commissioner have been considered by the Division Bench of this High Court in Income-tax References Nos. 70 and 76 of 1970 (Commissioner of Income-tax v. S. P. Bhatt ), where the assessee for the assessment year 1964-65 showed an income of Rs. 14,738. ....
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....anation, the assessee has to show--and this is upon him--that his failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. Now, this burden is not of the same nature as the burden which rests on the prosecution in a criminal case where the prosecution has to establish the guilt of the accused beyond reasonable doubt nor is it of the same nature as the burden which lies upon the revenue in establishing that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. It is a burden akin to that in a civil case where the determination is made on a preponderance of probabilities (underlining is ours). It is also not necessary that any positive material should be produced by the assessee in order to discharge this burden which rests upon him. The assessee may claim to have discharged the burden by relying on the material which is on the record in the penalty proceedings, irrespective of whether it is produced by him or by the revenue. The only question to which the income-tax authority has to address itself is whether, on the material on record in the penalty proceedings, can it be said on ....
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.... the assessment may be taken as relevant for considering the assessee's liability for penalty under section 28(1)(c). The Tribunal has not thought fit to attach any significance or importance to the filing of the revised return and merely proceeded on the fact that there was no explanation by the assessee for not making a return of the income he has earned from the profit under section 41(2) and as the assessee was represented by experienced chartered accountants at various stages of income-tax proceedings, he should be held guilty of gross negligence and, therefore, liable to be subjected to penalty. The Tribunal had, therefore, no occasion to find out and to address itself to the important question, whether this revised return was made by the assessee of his volition before concealment was detected in the course of the assessment proceedings. The Tribunal has also failed to decide the question whether, on consideration of the entire conduct of the assessee right from inception to the filing of revised return, the burden lying on the assessee is discharged having regard to preponderance of probabilities. In the absence of such a finding by the Tribunal, therefore, it is difficult ....