Law: Income Tax Act, 1961

Section: 256(2),271(1)(c),148

Law: Income Tax Act, 1922

Section: 28(1)(c)

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1975-76 - For assessment year 1975-76 as ITO found that value of certain bricks, which were inside kiln, had not been taken into consideration by assessee, he held that there was an escapement of income and, hence, he imposed penalty under section 271(1)(c) - On appeal AAC held that assessee had shown closing stock of bricks in kiln and had also declared sales fully in subsequent year of closing stock brought forward as opening stock during year 1975-76, and cancelled penalty - Whether on facts it could be said that assessee had discharged his burden under Explanation to section 271(1)(c) and, thus, no penalty was leviable - Held, yes FACTS For the assessment year 1975-76, the assessment of the assessee-firm was completed. A perusal of the accounts revealed that the value of certain bricks, which were inside the kiln, had not been taken into consideration by the assessee. The ITO held that there was an escapement of income and as such initiated penalty proceedings. He held that the provisions of section 271(1)(c) were attracted and imposed penalty. On appeal, the AAC held that there was no case for imposition of penalty and, therefore, deleted the same. On appeal by the revenue the Tribunal set aside the order of the AAC and upheld the imposition of penalty. On reference; HELD The combined effect of the provisions of section 271(1)(c) and Explanation is that first of all it should be proved that the assessee had failed to return the correct income and then it is open to the assessee to show that the failure to return the correct income did not arise from any fraud or gross or willful neglect on his part. If the assessee succeeds in proving this fact affirmatively, then no penalty can be imposed but if the assessee does not succeed in proving the said fact, then it will be deemed that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. The burden lies on the assessee to prove the fact that the failure to return the correct income did not arise from any fraud or any gross or willful neglect on his part. No…

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