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Explanation to section 271(1) [as it stood prior to 31-3-1976] of the Income-tax Act, 1961 - Penalty - For concealment of income - For assessment year 1973-74, asses-see filed its return declaring a total income of Rs. 4,678 but ITO after reject- ing assessee's explanation with regard to a sum of Rs. 20,000 made addition thereto -Further, IAC imposed penalty under section 271(1)(c) - On appeal, Tribunal rever- sed IAC's order on ground that in view of Explanation to section 271(1)(c), burden lay on department to prove that sum of Rs. 20,000 was actually earned by asses- see -Whether in view of Explanation added to section 271(1) by the Finance Act, 1964 and deletion of word 'deliberately' from section 271(1)(c), deemed income of Rs. 20,000 could be considered for purposes of levy of penalty in view of presumption which had to be drawn against assessee, unless said presumption was rebutted by assessee - Held, yes - Whether, consequently, matter had to be remanded to Tribunal to grant assessee an opportunity to rebut said presumption against him - Held, yes Facts For the assessment year 1973-74, the assessee filed its return declaring a total income of Rs. 4,678, but the ITO completed the assessment at the total income of Rs. 49,403, after rejecting the assessee's explanation with regard to a sum of Rs. 20,000. The Tribunal's finding with regard to this sum was that the assessee had not explained satisfactorily the non-disclosure of the said sum in the return. The IAC, thereupon, imposed penalty on the finding that the assessee was guilty of concealment of income as contemplated by section 271(1)(c). On appeal, the Tribunal, while reversing the IAC's order, held that in order to hold an assessee liable for penalty, the mere fact that the assessee's explanation about the cash available was disbelieved, was not sufficient, and in view of Explanation to section 271(1)(c) the burden lay on the department to prove that the amount was actually earned by the assessee during the relevant accounting year. On reference: Held The Explanation to section 271(1) added by the Finance Act, 1964, remained operative till 31-3-1976 when the Taxation Laws(Amendment) Act, 1975 came…

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