Law: Income Tax Act, 1961

Section: 68,69,69A,69B,69C,271(1)(c)

(a) Income-tax----Penalty---Concealment of Income---Cash credits-- -Assessee agreeing to inclusion of cash credits in its income for assessment year 1971-72---Income returned less than 80 per cent. of assessed income---Tribunal finding that assessee had rebutted presumption of concealment of income--Penalty could not be levied---Indian Income Tax Act, 1961, Ss.68, 69, 69-A, 69-B, 69-C & 271(1)(c). Where the total income returned by the assessee is less than 80 per cent. of the total income as assessed, the Explanation to section 271(1)(c) of the Income Tax Act, 1961, shifts the burden to the assessee to show that the difference was not owing to fraud or gross or wilful neglect on his part. This onus is rebuttable. If, in an appropriate case, the Tribunal or the fact-finding body is satisfied on relevant and cogent material on record and draws an inference thereupon that the assessee was not guilty of gross or wilful neglect or fraud, then, in such a case the assessee cannot come within the mischief of the section and suffer penalty. Sections 68, 69, 69-A, 69-B and 69-C are all part of the same scheme where certain amounts though not proved to be income of the assessee of the previous year concerned are for the purpose of charging to tax, deemed to be so by creating a legal fiction absolving the Department from its initial duty to prove that any such income is of the assessee. The fiction created under sections 68, 69, 69-A, 69-B and 69-C by itself cannot be extended to penalty proceedings to raise a presumption about concealment of such income. (b) Income-tax--- ----Penalty---Concealment of income---Cash credits---Law applicable to assessment---Explanation to S. 271(1)(c) inserted w.e.f. 1-4-1976 does not have retrospective effect---Indian Income Tax Act 1961, S.271(1)(c). The Explanation to section 271(1)(c) inserted with effect from April 1, 1976, which creates a legal fiction treating incomes added to the total income as concealed income, cannot be held to be retrospective in operation. In the previous year relevant to the assessment year 1971-72, the assessee furnished the return under section. 139 of the Act declaring an income of Rs.43,297. The return…

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