Law:

Section:

Section 271(1)(b) of the Income-tax Act, 1961 - Penalty - For failure to produce books of account - Assessment years 1962-63 to 1964-65 - Whether onus is on assessee to answer charge of having failed to comply with notice under section 142 - Held, yes - Assessee-firm was called upon to produce books of account in terms of section 142(1)(i) - It, however, failed to produce books of account on plea that while books were being taken to residence of one of partners, they were lost in taxi in which they were being brought - Assessing Officer rejected assessee's plea and imposed penalty under section 271(1)(b) - In penalty proceedings no explanation was given by assessee to substantiate plea for non-production of documents - Whether in such circumstances, imposition of penalty under section 271(1)(b) was justified - Held, yes FACTS The assessee-firm's books of account for the relevant assessment years were seized by the Sales Tax Department. Later, after the assessment under that Act had been completed, the seized books of account were released to one of the partners of the firm. The assessee was called upon to produce books of account in terms of section 142(1)(i). The assessee failed to produce the books of account on the plea that while the books were being taken to the residence of one of the partners, they were lost in the taxi in which they were being brought. The explanation of the assessee was not accepted in the assessment proceedings and registration proceedings. Paralled to the assessment and the registration proceedings, there was the penalty proceedings in terms of section 271(1)(b) for non compliance with the notice issued under section 142(1)(i). No explanation worth the name was given by the assessee in the penalty proceeding nor was any endeavour made by the assessee to substantiate the plea for non-production of the document which had been set up in the assessment proceeding. The ITO, therefore imposed penalty under section 271(1)(b). The AAC confirmed the imposition of penalty. The Tribunal however, allowed the assessee's appeal, on the grounds, firstly, that the Department had failed to establish that there was any deliberate default on the part…

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