TMI Blog2004 (10) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ful neglect on her part and it was not deliberate. The applicant having failed to do so, the penalty had rightly been imposed. - - - - - Dated:- 29-10-2004 - Judge(s) : R. K. AGARWAL., PRAKASH KRISHNA. JUDGMENT The judgment of the court was delivered by R.K. AGARWAL J. - The income-tax Appellate Tribunal, Allahabad, has referred the following question of law under section 256(1) of the Income-tax Act, 1961, hereinafter referred to as "the Act", for opinion to this court: 1. Whether, on the facts and in the circumstances of the case, the order passed by the Income-tax Officer imposing penalty was illegal having been passed with the approval of the Inspecting Assistant Commissioner of Income-tax in terms of the proviso to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the return she also stated that her investment in the property amounted to Rs. 25,000 which was financed out of loans and gifts amounting to Rs. 29,690 consisting of Rs. 5,000 as gift from Sri Masuriadin, Rs. 17,000 being loan from Sri Harish Chandra, Sri Jagdish Chandra and Sri Ram Shanker and Rs. 7,690 being loan taken from M/s. Chandra Scrap Suppliers. The Income-tax Officer required the applicant to furnish the details of investment in the property and the proof relating to its cost of construction. She also filed a valuation report, according to which the investment in the construction of the property amounted to Rs. 50,058 during the year under reference. The applicant claimed that the valuation given by the valuer, he had estimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The Inspecting Assistant Commissioner had accorded his approval for the levy of penalty of Rs. 20,370 as proposed by the Income-tax Officer, which was finally imposed, by the Assessing Officer. While levying the penalty the Assessing Officer had relied upon the Explanation to section 271(1)(c) of the Act, as it stood before its amendment by the Taxation Laws (Amendment) Act, 1975. The penalty has been upheld by the Commissioner of Income-tax (Appeals). The Tribunal has upheld the order levying penalty but reduced it to Rs. 15,000. The Tribunal while doing so has held that the approval accorded by the Inspecting Assistant Commissioner can only be considered as instructions under section 119(3) of the Act. We have heard Sri Vikram Gulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onted to explain the source of investment in the property. Thus, it is a case where the applicant had filed the return of income deliberately giving inaccurate particulars of the property and had concealed her income. It may be mentioned here that by section 40 of the Finance Act, 1964 the word "deliberately" occurring in clause (c) of section 271(1) of the Act has been omitted and the following Explanation was inserted at the end of sub-section (1): "Explanation. - Where the total income returned by any person is less than eighty per cent, of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bharose [1987] 165 ITR 14; CIT v. K.R. Sadayappan [1990] 185 ITR 49; Addl. CIT v. Jeevan Lal Sah [1994] 205 ITR 244 and B.A. Balasubramaniam and Bros. Co. v. CIT [1999] 236 ITR 977 that the view which had been taken earlier in CIT v. Anwar Ali [1970] 76 ITR 696 (SC) no longer holds the field and it is for the assessee to discharge the onus as contemplated in the said Explanation. In the case of K.P. Madhusudhanan v. CIT [2001] 251 ITR 99, the apex court has held that the Explanation to section 271(1)(c) is a part of section 271. When the Assessing Officer or the Appellate Assistant Commissioner issues a notice under section 271, he makes the assessee aware that the provisions thereof are to be used against him. These provisions include th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion raised by the Explanation stood rebutted. In the case of Chatur Singh Taragi [1978] 111 ITR 849, this court has held that merely because the explanation of the assessee is inaccurate or false that is by itself no ground for holding that the charge of concealment had been proved. The additions made by the Income-tax Officer to the assessable income have been found by the Tribunal to be all by estimate based upon the fact that the books of account were not properly maintained and were not open to verification and there was no particular item of income which the assessee could be said to have omitted to include in its return and in view of the shortcomings in the accounts the additions were called for. The Tribunal had held that the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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