TMI Blog2006 (1) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment of the court was delivered by N. Kumar J.- At the instance of the Revenue by reference under section 256(1) of the Income-tax Act, 1961 (for short hereinafter referred to as "the Act"), the Tribunal has referred the following substantial question of law for opinion of this court. "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that levy of penalty under section 271(1)(c) is unjustified?" The brief facts which give rise to this question are as under: The assessee is an individual and derives income from salary as regional manager of Orissa Industries Limited, Bangalore. A search was conducted in his residential premises on March 23,1992, and fixed d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no concealment on his part and that it is not a wilful neglect. The said finding is contrary to law and liable to be quashed and the approach of the Tribunal is not correct. In this connection he brought to our attention Explanation 1 to clause (iii) of section 271(1) of the Act and contended that when the assessee is not able to substantiate the explanation offered and fails to prove that such an explanation is bona fide then the authorities are justified in imposing the penalty. Per contra learned counsel appearing for the assessee submitted that, what the authorities have to consider is whether the cause shown by the assessee is false or is it reasonable. If they are satisfied that it is not false and it is reasonable, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the total income in respect of which he is assessable as a representative assessee does not exceed the maximum amount which is not chargeable to income-tax, a sum not exceeding one per cent, of the total income computed under this Act without giving effect to the provisions of sections 11 and 12, for each year or part thereof during which the default continued; (b) in any other case, in addition to the amount of the tax, if any, payable by him, a sum equal to two per cent, of the assessed tax for every month during which the default continued; Explanation.-In this clause 'assessed tax' means tax as reduced by the sum, if any, deducted at source under Chapter XVIIB or paid in advance under Chapter XVIIC; (ii) in the cases referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed ... Explanation 3.- Where any person who has not previously been assessed under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, fails, without reasonable cause, to furnish within the period specified in sub-clause (iii) of clause (a) of sub-section (1) of section 153 a return of his income which he is required to furnish under section 139 in respect of any ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulated time to show a reasonable cause for not filing such return. If the cause shown is not accepted then he is deemed to have concealed the particulars of his income. After such an opportunity being given, if the assessee fails to offer the explanation or the explanation offered is found to be false or fails to substantiate the explanation offered, then the amount added or disallowed in computing the total income of such person shall be deemed to represent the income in respect of which particulars have been concealed. Then the authorities would be justified in imposing the penalty at the rate specified in sub-section (1) of section 271. If the explanation offered is satisfactory or the reasonable cause shown is accepted by the authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew that the explanation offered was a reasonable one and it cannot be termed false. Further, it proceed to observe that in their opinion the concealment was because of a bona fide belief and that no evidence was adduced by the Revenue to show the concealment alleged by them and that there is no wilful neglect on the part of the assessee in not disclosing interest earned on the fixed deposit. It is in respect of these observations made by the Tribunal that serious grievance is made out by the Revenue as if it would amount to the Revenue accepting the said position as a statement of law. There is considerable force in this submission of learned counsel for the Revenue. When an explanation is offered, all that the authorities are expected t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
