Law: Income Tax Act, 1961

Section: 256(1),271(1)(c),145

Income-tax--- ----Penalty---Concealment of income ---I.T.O. making additions in respect of inflations in purchases and difference in cash credits---Explanation of assessee on those items alone considered and rejected---Imposition of penalty ---AAC cancelling penalty on ground that inflations and difference in cash credits due to bona fide mistake in totalling and not posting cash book entries in ledger ---AAC and Tribunal finding no fraud or gross or wilful neglect on part of assessee---Order of penalty quashed on merits after considering entire material on record---Tribunal not considering Explanation for first time---Justified---Indian Income Tax Act, 1961, S. 271(1)(c), Expln. The Explanation to section 271(1)(c) of the Income Tax Act, 1961, contains nothing but a rule of evidence pertaining to the onus of proof. Before the insertion of the Explanation to section 271(1)(c) by the Finance Act, 1964, the onus to prove that the assessee had furnished inaccurate particulars or had concealed the income was on the Revenue in every case. Difficulties were experienced in proving concealment even in apparently genuine cases. To get over that practical problem, the Explanation was added as a result of which, where the total income returned by an assessee was less than 80 per cent. of the total income assessed, the onus was on him to prove that the failure to file the correct income was not due to fraud or any gross or wilful neglect on his part. The Explanation thus raises a presumption which is rebut table and not conclusive. Moreover, the Explanation does not come into play merely because the returned income is less than 80 per cent of the assessed income. It applies only after recalculation of the assessed income by reducing it by the expenditure incurred bona fide by the assessee for the purposes of earning any income included in the total income, which has been disallowed as deduction by the Income-tax Officer. In the absence of appropriate data supplied by the assessee about the bona fide expenditure, though disallowed in the assessment proceedings, neither the income contemplated by the Explanation can be arrived at nor penalty, in accordance with law, can be…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492