Law: Income Tax Act, 1961

Section: 256(2),271(1)(c),143,144,147

Income-tax--- ----Penalty---Concealment of income---Explanation to S.271(1)(c), Indian Income Tax Act, 1961---Presumption of concealment---Onus on assessee to rebut---Cancellation of penalty by Tribunal not justified---Indian Income Tax Act, 1961, S.271(1)(c). In the assessment for the assessment year 1964-65, the Income Tax Officer added to sum of Rs.25,000 to the income of the assessee as income from undisclosed sources, as the assessee did not produce any evidence to support his explanation that the amount was deposited by N by cash. The Income Tax Officer levied penalty under section 271(1)(c) of the Income Tax Act, 1961. The Tribunal following the ratio of the decision of the Supreme Court in CIT v. Anwar Ali (1970) 76 ITR 696, held that the inability of the assessee to prove a credit did not mean that there was any fraud or gross or wilful neglect on the part of the assessee and cancelled the penalty. On a reference under section 256(2): Held, that in CIT .v. Jeevan Lal Sah (1994) 205 ITR 244 the Supreme Court pointed out that the law had undergone a change after the introduction of the Explanation to section 271(1)(c) in the year 1964 and the rule regarding burden of proof enunciated in Anwar Ali's case (1970) 76 ITR 696 (SC) was no longer valid. Whenever there was a failure on the part of the assessee in the circumstances referred to in the Explanation to section 271(1)(c), the statutory presumption automatically followed and it had to be deemed that the assessee had concealed the particulars of his income. No doubt the presumption could be rebutted. On the facts and in the circumstances of the instant case, the Tribunal was not justified in cancelling the penalty levied under section 271(l)(c). CIT (Addl.) v. Jeevan Lal Sah (1994) 205 ITR 244 (SC) and CIT v. Anwar Ali (1970) 76 ITR 696 (SC) not fol. CIT v. Mussadilal Ram Bharose (1987) 165 ITR 14 (SC) and CIT v. Rupabani Theatres (P.) Ltd. (1981) 130 ITR 747 (Cal.) ref. JUDGMENT K. SHIVASHANKAR BHAT, J.---In respect of the penalty proceedings for the assessment year 1964-65, the following question has been referred by the Income-tax Appellate Tribunal under section 256(2) of the Income-tax Act, 1961:…

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