Law: Income Tax Act, 1961

Section: 271(1)(c)

Income-tax----Penalty---Concealment of income---Burden of proof---Income returned less than 80 percent. of assessed income ---Assessee must prove that there was no concealment of income---Cancellation of penalty by placing burden of proof on Revenue is not valid---Indian Income-tax Act, 1961, S.271(1)(c). The object and intent of the Legislature in omitting the word "deliberately" from clause (c) of section 271(1) of' the Indian Income-tax Act, 1961, and adding an Explanation thereto by the Indian Finance Act, 1964, was to bring about a change in the existing law regarding the levy of penalty so as to shift the burden of proof from the Department on to the assessee in the class of cases where the returned income of the assessee was less than 80 per cent of the assessed income. In other words. in a case where the returned income is less than 80 percent. of the assessed income, the Explanation becomes applicable with the resultant attraction of presumptions against such assessee. The legal presumptions that arise being (i) that the amount of the assessed income is the correct income and that it is, in fact the income of the assessee himself; (ii) that the failure of the assessee to return the aforesaid correct assessed income was due to fraud; and (iii) that the failure of the assessee to return the aforesaid correct assessed income was due to gross or wilful neglect on his part. Where the returned income was less than 80 percent. of the assessed income and the Tribunal cancelled the penalty on the ground that the Revenue had not proved that the assessee had concealed its income: Held, that the cancellation of penalty was not valid. Vishwakarma Industries v. C.I.T. (1982) 135 1TR 652 (P & H); Chuharmal v. C.I.T. (1988) 172 ITR 250 (SC); (1988) 3 SCC 588 and C.I.T. v. Hoshiarpur Express Transport Co. Ltd. (1986) 162 ITR 393 (P & 1-I) JIM. C.I.T. v. Khoday Eswarsa & Sons (1972) 83 ITR 369 (SC) ref. JUDGMENT S.S. SODHI, J.---The matter here relates to the imposition of penalty under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The assessee is a private limited company carrying on the business of passenger…

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