Law: Income Tax Act, 1961

Section: 271(1)(c)

Income-tax----Penalty---Concealment of income---Burden of proof---Addition trade on account of low withdrawals for- household expenses ---Assessee unable to discharge burden---Levy of penalty valid---Indian, Income. Tax Act, 1961, S.271(1) & (c). Under section 271(1)(c) of the Indian Income Tax Act, 1961 if any person has concealed his particulars of income or furnished inaccurate particulars of such income, then he is liable for penalty. The word "deliberately" was omitted in this clause and still the word "concealed" contemplates the element of mens rea. The word "inaccurate particulars" have also to be interpreted to mean the action of an assessee as a result of gross or wilful neglect on his part. There may be a case where the additions have been made purely on estimate without going into the details of the expenditure incurred. In such a case, penalty cannot be levied on the figures which are merely based on guesswork or estimate. But, in a case where a detailed enquiry is made and the assessee is confronted with the evidence and has not been in a position to rebut the factual position on the basis of which the additions have been made, the decision stands on a different footing. The Explanation under section 271(l)(c) also contemplates the burden to be discharged by the assessee where the total income returned by any person is less than 80 per cent of the total income assessed. The assessee has to prove that the failure to return the correct income did not arise from any breach or any gross or wilful neglect on his part. The failure of the assessee to prove that there was no breach or any gross or wilful neglect on his part leads to a presumption of concealment of particulars of income or furnishing inaccurate particulars of such income. In the course of the assessment of the assessee for the assessment year 1980-81, the Income-tax Officer was not satisfied with the low figures of withdrawals of Rs.11,439 on account of household expenses shown by the assessee and made an addition on that account. The Income-tax Officer, after referring to the enquiry report of the Inspector, estimated the educational expenses of the two sons of the assessee, messing…

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