Law: Income Tax Act, 1961

Section: 256(2)

Income-tax---Penalty---Concealment of particulars of income---Income returned less than 80 per cent. of assessed income---Presumption that there has been concealment of income---Duty of Tribunal to find out if presumption had been rebutted---Matter remanded. Once the income returned is less than 80 per cent. of the assessed income, the Explanation to section 271(1)(c) of the Indian Income-tax Act, 1961, becomes applicable. Then two presumptions will follow. They are: (a) that the amount of the assessed income is the correct income and it is in fact the income of the assessee; (b) that the failure of the assessee to return the correct assessed income was due to fraud or gross or wilful neglect on the assessee's part. From the factum of presumption spelt out, the Explanation becomes a rule of evidence. Presumptions raised by the Explanation are not conclusive presumptions, but are rebuttable. The initial burden of discharging the onus of rebuttal is on the assessee. Once that initial burden is discharged, the assessee would be out of the mischief of the Explanation until and unless the Revenue is able to establish afresh that the assessee in fact concealed the particulars of income or furnished inaccurate particulars thereof. It, therefore, follows that when an assessee on whom the initial burden is placed fails to discharge the same, his case would fail and he would straightaway come within the mischief of the Explanation. If, however, the assessee discharges the initial burden, the presumptions stand rebutted and the burden shifts to the Revenue to establish that the assessee has concealed income. The assessee can be said to have discharged the initial burden by a preponderance of probabilities and evidence. Such a burden can be discharged by the material already existing on the record or by the assessee choosing to adduce fresh evidence during the course of the penalty proceedings. If the assessee does not choose to adduce fresh evidence or produce fresh materials, it is still open to him to show and prove that on the existing material itself, the presumption raised by the Explanation would stand rebutted. The assessee firm which was running a hotel returned…

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