Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1960-61 and 1965-66 - Additions made to assesses, income on account of unexplained credit and penalty under section 271(1)(c) was levied - Assessee explained that cash credits were genuine deposits received and returned in ordinary course of business - Tribunal finding that explanation of assessee was not entirely inconsistent with probability, deleted penalty - Whether Tribunal was justified in deleting penalty - Held, yes FACTS Certain amount was added to the income of the assessee on the basis of certain unexplained credit. The IAC imposed penalty under section 271(1)(c). The Tribunal held that the mere fact that the creditors did not appear in response to the summons or that the assessee failed to produce them, did not lead to the conclusion that the entries made in the assesses, books were not genuine. The Tribunal did not think that the explanation of the assessee was entirely inconsistent with the probability that the amounts in question could be genuine deposits received and returned in the ordinary course of business. Considering all the facts and circumstances of the case, it deleted the penalty. On reference : HELD The Tribunal took into account the Explanation to section 271(1)(c), placed the initial burden on the assessee, proceeded on the footing that it was a rebuttable presumption and could be displaced by the assessee by proving that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on its part. It was the settled view in law that where on consideration of all facts and circumstances, pros and cons, a conclusion is reached, it is one of fact. There may be cases where errors of law would be committed in reaching a conclusion. It was not the case of the revenue that any such error was committed. The Tribunal did not commitment in law in deleting the penalty. Note: The case was decided in fovour of the assessee. CASES REFERRED TO CIT v. Anwar Ali [1970] 76 ITR 696 (SC), CIT v. K.C. Behera [1976] 103 ITR 479 (Orissa), CIT v. K.C. Behera [1976] 105 ITR 193(Ori.), CIT v. Jubilee Mills Ltd. [1968] 68 ITR…

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