Law:

Section:

Section 271(1)(c) of the income-tax act, 1961-Penalty-For concealment of income-Ito was not satisfied with evidence tendered by assesses explaining nature and source of certain cash credits and included peak credit of loans as income from undisclosed sources although assessee furnished confirmatory letters from creditors, discharged hundis and also addresses of parties-Thereafter, penalty was imposed on assessee under section 271(1)(c)-Whether tribunal was justified in cancelling said penalty on ground that assessee had discharged onus placed on it and that department had not placed any evidence to rebut material evidence produced by assessee-Held, yes Facts During the assessment proceedings, the ITO noticed several cash credits and when asked to explain the nature and source of these cash credits, the assessee furnished confirmatory letters from the creditors, discharged hundis of the credits and also addresses of the parties. The ITO, however, was not satisfied with all these evidence and included the peak credit of the loans as the assessee's income from undisclosed sources. Thereafter, the penalty was imposed under section 271(1)(c) on the ground that the assessee had not discharged the onus and was guilty of concealment on the basis of theExplanation to section 271(1)(c). The Tribunal, while cancelling the order of penalty, held that the assessee had discharged the onus placed on it and that the department had not placed any evidence to rebut the material evidence produced by the assessee. On reference : Held The Explanation to section 271(1)( c) presumes gross or wilful neglect on the part of the assessee. The presumption is a rebuttable presumption. If the presumption is rebutted by evidence then the onus is shifted to the department to prove that the assessee has concealed the income or furnished inaccurate particulars thereof. When there is a difference of more than 20 per cent between the income returned and the income assessed, the assessee is only concerned to explain the said gap. The explanation may be accepted or rejected by the department but mere rejection of the explanation does not, by itself, prove that the assessee has concealed income and…

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