Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1965-66 and 1966-67 - Whether when Explanation to section 271(1)(c) is attracted to a case, onus lies primarily upon assessee and not upon department, to prove that disparity between income returned and income assessed did not arise from any fraud or any gross or wilful neglect on his part - Held, yes FACTS In the penalty proceedings, the IAC heard the assessee but the Explanation offered by it, regarding the alleged concealment of income and the particulars there of were not accepted. Consequently, a penalty at the rate of 20 per cent of the tax sought to be evaded was levied for each of the assessment years. On appeal, the Tribunal cancelled the order of penalty on the ground that the additions made to the assessee's returned income "were made just on estimate, no positive evidence was brought on record to justify that those additions were actually in fact earned and/or were not incurred for the purpose of the business and thereby, either the assessee concealed the income or disclosed inaccurate particulars thereof" and even thought the penalties had been imposed by reference to the Explanation to section 271(1)(c), it was for the department, to prove by cogent evidence that the disparity between the income returned and the income assessed was due to wilful neglect or fraud on the part of the assessee. On reference : HELD When the Explanation to section 271(1)(c) is attracted to a case, the onus lies primarily upon the assessee to prove that the disparity between the income returned and the income assessed, the former being less than 80 per cent of the latter, did not arise from any fraud or any gross or wilful neglect on his part. It is not for the department, in such a case, to prove that the disparity was in fact occasioned by any fraud or any gross or wilful neglect on the part of the assessee. Such being the position in law, the order of the Tribunal deleting penalty imposed upon the assessee in terms of section 271(1)(c), was not in accordance with law. Note: The case was decided against the assessee. CASES REFERRED TO CIT v. K.C. Behera [1976] 103 ITR…

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