Law: Income Tax Act, 1961

Section: 271(1)(c),Expln,256.

Income-tax----Penalty---Deemed concealment---Returned income less than 80 per cent of assessed income ---Rebuttable presumption that assessee has concealed income--¬Onus on assessee to rebut presumption by cogent and reliable evidence--¬Tribunal holding that assessee's explanation false but canceling penalty--¬Question of law arises and is to be referred to High Court---Income-tax Act, 1961, Ss. 271(1)(c), Expln. 256. The assessee had paid as on-money Rs.18,750 for purchase of a plot of land in his son's name. To support the existence of cash available to the extent of Rs.18,750 which was brought to tax in his hands in the assessment year 1966-67 as income from undisclosed sources, the assessee had prepared a cash statement. The Income-tax Officer rejected the cash statement as it suffered from certain defects, viz., absence of drawings for personal expenses, and initiated penalty proceedings under section 271(1)(c) and referred the case to the Inspecting Assistant Commissioner. The Inspecting Assistant Commissioner imposed a penalty equal to the income concealed holding that the assessee had failed to discharge the burden cast on him by the Explanation to section 271(1)(c) of the Income-tax Act, 1961. On appeal, the Appellate Tribunal found that the Income¬tax Officer was justified in saving that the assessee's explanation was not only not convincing but false because there was no cash available to the assessee to make the payment, but, purporting to follow Anwar Ali's case (1970) 76 I T R 696 (SC), held that the rejection of the assessee's explanation even on the ground of falsity would not mean that the amount represented the assessee's income and more so his concealed income. The Department's application for reference having been rejected both by the Tribunal and the High Court, the Department obtained special leave to appeal. In the resultant Civil Appeal: Held, allowing the appeal, that the moment it was found that the income returned was less than 80 per cent of the income assessed, the onus to prove that it was not the failure of the assessee that caused the difference shifted to the assessee. But the onus was rebuttable: the presumption of concealment…

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