Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1964-65 - Whether once difference of more than twenty per cent between assessed income and returned income occurred, it would be presumed that assessee had concealed his correct income, and, thereupon, onus would be upon assessee to show that there was no fraud or any gross or wilful neglect on his part - Held, yes FACTS The difference between the assessed sum and the returned sum being more than 20 per cent penalty proceedings was initiated in terms of section 271(1)(c). No explanation was given by the assessee before the IAC, who, therefore, imposed the penalty. The Tribunal deleted the penalty holding that the Department had not proved that the difference was such which could by itself lead to an inference that the assessee had committed any fraud or gross or wilful neglect in returning the correct income. The Tribunal also rejected the reference application filed by the revenue. On application under section 256(2). HELD Once a difference of more than 20 per cent between the assessed income and the returned income occurred, it would be presumed that the assessee had concealed his correct income. In the situation covered by the Explanation to section 271(1)(c), the onus would be upon the assessee to show that there was no fraud or any gross or wilful neglect on his part. It must follow that the revenue had no more to establish that there was any deliberate endeavour by the assessee to conceal the correct income. The above being the law, the Tribunal clearly erred in placing the onus upon the Department to establish that the difference between the income returned and the income assessed was not such which could by itself lead to an inference that the assessee had committed any fraud or gross or wilful neglect in returning the correct income. The assessee having failed to bring any material at any stage which could show that he had extended his reasonable explanation, it was to be held that the Tribunal had erred in cancelling the penalty. Note: The case was decided against the assessee. B.P. Rajgarhia and S.K. Sharan for the Appellant. JUDGMENT This is a…

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