TMI Blog2004 (12) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... of income was leviable on the assessee?" The reference relates to the assessment year 1975-76. Briefly stated, the facts giving rise to the present reference are as follows: The Income-tax Officer had imposed penalty amounting to Rs. 79,136 on the applicant on account of concealment of particulars of his income in respect of the following item: "Inflation of purchase in Lehi and Tilli account Rs. 20,000 Unexplained loss and shortage in Tilli account Rs. 9,568 Shortage in groundnut account Rs. 10,000 ----------- Rs. 39,568 ----------- Feeling aggrieved by the said order, the applicant preferred an appeal before the Commissioner of Income-tax (Appeals) who deleted the penalty relying mainly on his own order in the quantum appeal where he had granted relief of Rs. 25,700 to the applicant. It may be mentioned here that against the order of the Commissioner of Income-tax (Appeals) in the quantum appeal, the Revenue had preferred an appeal before the Tribunal which, vide order dated February 16, 1983, had restored the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption raised against the applicant by the said Explanation would remain, namely, that the difference between the assessed income and the returned income had arisen on account of fraud or gross or wilful neglect of the applicant. This presumption could have been rebutted by the applicant but inasmuch as no evidence has been led by the applicant in this regard, the said presumption remained unrebutted and in that circumstance, the penalty has to be sustained in reference to the items in reference to which addition has been made by the Income-tax Officer and ultimately sustained by the Tribunal. We have heard Sri Vikram Gulati, learned counsel for the applicant, and Sri A.N. Mahajan, learned standing counsel appearing for the Revenue. Learned counsel for the applicant submitted that no discrepancy whatsoever was found and the sales were duly verified and further 6R vouchers were produced before the sales tax authorities which had been accepted under the Sales Tax Act and, therefore, mere non-production of 6R vouchers before the income-tax authorities as they had been misplaced, would not entitle the authorities to draw an adverse inference. He further submitted that the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section." Prior to the aforesaid amendment made by the Finance Act, 1964 the apex court in the cases of CIT v. Anwar Ali [1970] 76 ITR 696 and CIT v. Khoday Eswarsa and Sons [1972] 83 ITR 369 has held that the burden is on the Department to prove that a particular amount is a revenue receipt. It would be perfectly legitimate to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se falls under section 28(1)(c) of the Indian Income-tax Act, 1922, would not be discharged in such a case and penalty cannot be imposed. It may be mentioned here that the aforesaid case related to the imposition of penalty for concealment of income under the Indian Income-tax Act, 1922 in which the Explanation, as inserted in the year 1964, was not there. Thus, no benefit or advantage can be obtained from the aforesaid decision. In the case of B.S. Badve [1982] 138 ITR 682, the Bombay High Court has held that the returns which were filed by the assessee, were merely on the basis of estimates of income and what the Income-tax Officer did was to raise the estimates of income given by the assessee in respect of the income from the cinema business and from the running of the power-looms. There was nothing in the order of the Income-tax Officer to show that he found the estimates given by the assessee to be fraudulent or that the Income-tax Officer came to the conclusion that the assessee had made any deliberate false estimate of his income. Moreover, even the additions made by the Income-tax Officer in the estimates of income made by the assessee are so modest, that merely from thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the cases of suspected concealment but applies only where the income returned is less than 80 per cent. of the income assessed minus the expenses incurred bona fide and disallowed by the Income-tax Officer as a deduction. In the aforesaid case, there was no finding that this requirement was satisfied. In fact, the Inspecting Assistant Commissioner of Income-tax did not rely upon the Explanation and, as such, he did not record a finding that the income returned was less than 80 per cent. of the assessed income, attracting the Explanation nor has the Tribunal done so and once the Explanation is out of the way, the case would be governed by the law laid down by the apex court in the case of Anwar Ali [1970] 76 ITR 606. The penalty proceedings under section 271(1)(c) of the Act, are penal in nature and the burden is on the Department to establish that the assessee has been guilty of concealment, etc. Such a finding has to be recorded on positive material and cannot be inferred from the fallacy of the assessee's explanation. The aforesaid decision is of no help to the applicant as in the present case we find that the Explanation is attracted and further in view of the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his books of account and has not concealed any particulars. In the case of Anantharam Veerasinghaiah and Co. [1980] 123 ITR 457 the apex court has held that when an "intangible" addition is made to the book profits during an assessment proceeding, it is on the basis that the amount represented by that addition constitutes the undisclosed income of the assessee. That income, although commonly described as "intangible", is as much a part of his real income as that disclosed by his account books. It has the same concrete existence. It could be available to the assessee as the book profits could be. It may be mentioned here that the applicant had not produced 6R vouchers on the ground that it has been lost and misplaced and he wanted to take the benefit/advantage of the fact that the said vouchers had been produced before the sales tax authorities who have accepted his books of account. It was incumbent upon the applicant to produce 6R vouchers before the income-tax authorities as well if he wanted to show that he had not concealed the particulars of his turnover. A Division Bench of this court in the case of Haji Lal Mohd. Biri Works v. CIT [1982] 134 ITR 718 has held that whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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