Law: Income Tax Act, 1961

Section: 271

(a) Income-tax----Penalty---Concealment, of income---.Returned income less than 80 per cent. of assessed income---Presumption of concealment---Additional construction in hotel with loan obtained from State Financial Corporation--­Finding in assessment proceedings that there was discrepancy in cost disclosed by assessee and estimate by assessee's construction engineer--­Finding relevant but not conclusive---Additional evidence tendered in penalty proceedings in the form of certificate by construction engineers that construction was not entirely in accordance with original estimate which resulted in considerable saving in expenses-- .-Report of Department valuer supporting certificate ---Assessee had discharged its onus of proving that there had, been no concealment---Penalty could not be levied---Indian Income Tax Act, 1961, S.271(1)(c). In a case where the returned income is below 80 per cent. of the assessed income, the provisions of the Explanation to section 271(1)(c) are automatically attracted and a presumption against the assessee is drawn to the effect that he has concealed the particulars of income or that he has furnished inaccurate particulars of income warranting imposition of penalty. This presumption available under the Explanation is a rebuttable one and the burden of proof in such circumstances is on the assessee to establish that the failure to return the correct income is not on account of any fraud or gross or wilful neglect on the part of the assessee. The burden of proof cast on the assessee is to be discharged as in a civil case, that is, on a preponderance of the probabilities of the case. In penalty proceedings, the findings entered in the assessment proceedings are rot conclusive and they are only relevant. It is open to the authorities and the Tribunal to consider the entire materials on the record of the assessment proceedings and to have a closer scrutiny of the same for the purpose of ascertaining whether the assessee has discharged the burden cast on it under the Explanation to section 271(1)(c) of the Act. It is also open to the assessee to let in further materials in penalty proceedings to establish that the failure to furnish the…

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