Law: Income Tax Act, 1961

Section: 256(2),271(1)(c),143,144,147

Section 271(1)(c) read with section 256 of the Income-tax Act, 1961 - Penalty - For concealment of income - Tribunal while upholding addition of concealed income deleted penalty under section 271(1)(c) holding that falsity of explanation or absence of explanation could not be construed as establishment of concealment and onus was on revenue - Whether matter rested on the determination of on whom onus lay to prove that concealment was deliberate or not, and true effect of Explanation to section 271(1) and as such question of law did not arise out of Tribunals order - Held, yes FACTS On the assessee's appeals against addition of concealed income and penalty under section 271(1)(c), the Tribunal upheld the addition but deleted the penalty on the ground that the revenue had to establish not by mere falsity of the Explanation of the assessee or no explanation on the part of the assessee that the subject-matter of assessment was the concealed income of the assessee and that the burden lay on the revenue to establish the change of concealment and the absence of an Explanation of the falsity of an Explanation could not be construed as establishment of concealment. The revenue's application under section 256(1) was rejected. On application under section 256(2) : HELD The matters rested on the determination of on whom the onus lies to prove that the concealment was deliberate or not, and the true effect of the Explanation to section 271(1). Therefore, question of law did arise and the Tribunal was to be directed to refer the same along with the statement of the case for the opinion of the court. Note : The case was decided in favour of assessee. JUDGMENT This is an application under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), requiring the Tribunal to refer the following question of law for our opinion: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that penalty was not exigible and in deleting the same?" On facts, there is no dispute that there was concealment of part of the income within the meaning of section 271(1)(c) of the Act. The Inspecting Assistant Commissioner levied…

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