Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1962-63 - Whether, for purpose of levying penalty, concealment is committed by assessee when he files return and, therefore, that is material date with reference to which appropriate law should be applied - Held, yes - Whether Explanation to section 271(1)(c) merely raises a presumption which is rebuttable - Held, yes - Whether such a presumption can be rebutted not only by direct evidence but also by circumstantial evidence - Held, yes - Whether finding recorded by Tribunal that assessee was not guilty of concealment was finding of fact which could not be challenged in reference - Held, yes FACTS The assessee had income from various sources including income from business, interest from securities, income from salary as managing director of a company and as a member of the Legislative Council. The ITO did not accept the return and made huge additions in the business income and on account of income from undisclosed sources, he also initiated penalty proceedings and referred the matter to the IAC. The IAC held that the Explanation to section 27I(1)(c) was attracted as the income returned by the assessee was less than 80 per cent, of the income assessed. He levied certain amount of penalty. It might be mentioned that the assessee died after filing of return and the assessment proceedings as also the penalty proceedings were continued against his legal representatives. The IAC had levied penalty with reference to the total income as computed by the ITO but as the major additions had been knocked off on appeal the department confined its case for the purposes of penalty to the item of Rs. 2,400 received by the assessee as his salary from the Legislative Council. One of the questions that was raised before the Tribunal was as to whether the legal representative of a deceased person could be held liable for penalty for concealment when the return had been filed by the deceased during his life-time. The Tribunal did not decide this question as in its opinion no case of concealment had been made out against the assessee in respect of salary which had not been included…

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