Law:

Section:

Explanation to section 271(1)(c) [as it stood prior to 1-4-1976] of the Income-tax Act, 1961 - Penalty - For concealment of income - For assessment years 1966-67 ft and 1967-68 assessee submitted his returns on estimate basis in absence of proper accounts - ITO, however, enhanced his income and completed assessment with assessee's agreement - IAC imposed penalty - Tribunal cancelled penalty without recording findings about applicability of explanation to section 271(1)(c) - Whether tribunal was justified - Held, no [case remanded back to tribunal] Facts The assessee was a building contractor and was also dealing in furni- ture. For the assessment years 1966-67 and 1967-68 in the absence of proper accounts of his business he filed returns for two assessment years on the basis of estimate. The ITO, however, assessed his income at a higher figure. This was done with the assessee's agreement. The IAC thereupon imposed penalty under section 271(1)(c). On appeal, the Tribunal cancelled the penalty. On reference : Held The Tribunal had set aside the penalty without recording the requisite findings on the basis of which alone the question of penalty could be decided. The returned income being less than 80 per cent of the assessed income for each of these two years prima facie the Explanation to section 271(1)(c) was applicable. This being so, it had to be further seen whether requisite difference between the assessed income and the returned income remained in order to draw a presumption arising under the Explanation taking into account the assessee's explanation and deduction on account of any bona fide expenditure claimed by the assessee and disallowed at the time of assessment. In absence of these findings the ultimate outcome which depended upon consideration of the Explanation could not be decided. Obviously this was not done on account of the fact that all concerned including the Tribunal appeared to have overlooked this statutory provision contained in theExplanation to section 271(1)(c). Hence, the matter was remanded back to the Tribunal for a fresh decision with advertence to these observations. R.N. Surolia for the Applicant. K.L. Saxena for the Respondent.…

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