Law: Income Tax Act, 1961

Section: 27I(1)(c)

Income-tax----Penalty---Concealment of income---Presumption of concealment where additions to income are sustained by Appellate Authorities--Presumption can be rebutted---Tribunal finding that explanation regarding additions was satisfactory---Tribunal justified in deleting penalty---Indian Income Tax Act, 1961, S.27I(1)(c). Under Explanation 1 to section 271(1)(c) of the Income Tax Act, 1961, a presumption will arise that if any addition made by the Assessing Officer is sustained by the appellate authority, then that will represent the concealed income of an assessee and the onus will be on the assessee to rebut the presumption. A presumption under Explanation 1 is obviously available, when an assessee fails to offer an explanation or offers an explanation, which is found by the Assessing Officer to be. false or if the assessee offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him. Explanation 1 raises an initial presumption that the additions represented concealed income of the assessed, but that is not an absolute presumption and depending on the facts and circumstances of the case, the onus might shift to the Revenue by mere denial of the assessed: For the assessment years 1979-80 and 1980-81 certain additions were made by the Assessing Officer on the basis of the materials seized on January 29, 1982, when a search under section 132 of the Act was carried out at the residence of the assessee. The additions finally upheld by the Tribunal related -to (i) income from toddy .business, (ii) income from benami jewellery business, and (iii) share income of minors from a firm. Penalty proceedings were initiated and penalty was imposed. The Tribunal found that so far as the toddy business income was concerned, the assessee contended that he had no connection with the business. The abkari business could not be carried on by any one without a valid licence. In view of the denial of the assessed, it was for the Revenue to prove nexus between the toddy business for which no licence was said…

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