Law:

Section:

Section 271(1)(c), read with section 256, of the Income-tax Act, 1961 – Penalty – For concealment of income – Assessment year 1971-72 – Residence of assessee was searched by Enforcement Directorate and currency notes of Rs. 6,04,500 were seized - ITO initiated assessment proceedings – Assessee filed return showing an income of Rs. 3,850 – Assessee's statement that amount seized did not belong to him but it was collected for purchase of shares was rejected and aforesaid amount as found during course of search was treated as undisclosed income of assessee – ITO also initiated penalty proceedings and IAC imposed certain penalty – Tribunal, however, cancelled penalty so levied – Whether as total income returned by assessee was less than eighty per cent of total income assessed, onus lies on assessee to prove that concealment of income was not deliberate – Held, yes – Whether, therefore, referable question of law did arise out of order passed by Tribunal – Held, yes FACTS During the accounting year relevant to the assessment year 1971-72, the residence of the assessee was searched by the officers of the Enforcement Directorate, who recovered a suit case containing currency notes of Rs. 6,04,500 from the assessee's bedroom. On receipt of information about the search, the ITO initiated assessment proceedings for the assessment year 1971-72, and served upon the assessee a notice under sub-section (2) of section 139. The assessee filed the return on showing an income of Rs. 3,850. The assessee's contention that the amount was raised by him as loan from various persons for purchasing the shares of a company was not accepted by the ITO and he treated the amount of Rs. 6,04,500 as the assessee's income from undisclosed sources under section 69A. The ITO also initiated penalty proceedings under section 271(1)(c). Thereafter, the IAC had imposed penalty. On appeal, the Tribunal cancelled the penalty so levied. The reference filed under section 256(1) was also cancelled. On application under section 256(2) : HELD A bare perusal of the Explanation to section 271(1)(c) shows that where the total income returned by any person is less than eighty per cent of the total income as…

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