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Explanation to section 271(1)(c) of the income-tax act, 1961 [as it stood before 1-4-1976]-Penalty - For concealment of income - Assessment year 1965-66 In quantum appeal, tribunal upheld addition made to assessee's total income - IAC levied penalty under explanation t section 271(1)(c) - Tribunal set aside penalty order by giving benefit of doubt to assessee Whether justified - Held, on facts, no Facts In quantum appeal for the assessment year 1965-66, the Tribunal upheld the additions of Rs. 50,000 representing unaccounted firewood and Rs. 41,500 as income from other sources. The IAC, accordingly, levied a penalty of Rs. 1,60,000 under Explanation to section 271(1)(c). On appeal, the Tribunal cancelled the penalty order, holding (j) that the addition of Rs. 50,000 was made on estimate basis; and ( ii) that the sum of Rs. 41,500 was added only because the assessee's explanation had been found unsatisfactory. On reference: Held 1. After the introduction of Explanation to section 271(1)(c) by the Finance Act, 1964, with effect from 1-04-1964, in cases where the returned income was less than 80 per cent of the assessed income, the onus lay upon the assessee to establish that he was not guilty of fraud or gross or wilful neglect in filing the return. 2. No question of giving benefit of doubt to the assessee arose and the penalty could be knocked off only where the Tribunal held that the assessee had established that failure to return the correct income was not due to his fraud or gross or wilful neglect. 3. The Tribunal was, accordingly, not justified in cancelling the penalty order by giving benefit of doubt to the assessee. Case Review Rukmani Bahu v. Addl. CIT [1979] 116 ITR 468 (All.) followed. Editor's Note The High Court did not express any opinion about quantum of penalty as the Tribunal had not gone into that question. CASE REFERRED TO Rukmani Bahu v. Addl. CIT [1979] 116 ITR 468 (All.) . Judgment C. S. P. Singh J.-The Income-tax Appellate Tribunal, Delhi Bench "B", has referred the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in cancelling the penalty ?" The assessment…

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