9911796707
TMI Blog2001 (6) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year under consideration is 1971-72 and the accounting period relevant for the said assessment year is S. Y. 2026. The assessment under section 143(3) was framed by the Income-tax Officer on March 28, 1974.As against returned income of Rs.9,720, the assessee was assessed on a total income of Rs.40,189 by making an addition of Rs.27,500 as income from undisclosed source in respect of certain amounts credited in the name of six different creditors, apart from various disallowances with which we are not concerned at present. The Income-tax Officer initiated proceedings under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act"), and referred the matter to the Inspecting Assistant Commissioner ("the IAC") as re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1999] 237 ITR 570, wherein the Supreme Court was called upon to interpret the word "may" occurring in section 69 of the Act. After referring to the recommendation of the Select Committee, it has been held that, though the word "shall" was used in the Bill while introducing section 69 of the Act, the said word was substituted by the word "may" and that this clearly indicated the intention of the Legislature that while enacting section 69, a discretion was conferred on the Income-tax Officer in the matter of treating the source of investment which had not been satisfactorily explained, as income of an assessee and that the Income-tax Officer was not obliged to treat such source as income in every case where the explanation offered was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her. Referring to the Explanation under section 271(1)(c) of the Act, it was further submitted on behalf of the Revenue that, admittedly, there was a difference of more than 20 per-cent. as statutorily required to invoke the Explanation and that there was no explanation forthcoming from the assessee which could satisfactorily explain such difference and, alternatively, it was contended that the explanation tendered by the assessee did not discharge the burden which lay upon the assessee under the Explanation to show that there was no failure on the part of the assessee to return the correct income. It was further submitted that, to the contrary, as held by the Inspecting Assistant Commissioner, there was a fraudulent intention or a gross o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich 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." The Explanation provides that, in case there is a difference, as statutorily provided, between the total income returned by any person and assessed, such person shall have to prove that the failure to return the correct income was not due to any fraud or any gross or wilful neglect on his part. In the absence of such burden being discharged by the person concerned, it will be deemed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 68 of the Act for the purposes of assessing the total income of the assessment year. From this concession, it is an entirely different matter, whether the said sum could be treated as concealed income of the year under consideration. In an almost similar situation, this court in the case of CIT v. Vinaychand Harilal [1979] 120 ITR 752, has held thus: "That, normally, the Revenue must establish that the receipt of the amount in question constituted the income of the assessee. The Explanation to section 271(1)(c) of the Act enables the Revenue to discharge this burden of proof laid on it if the condition regarding the returned income being less than 80 per cent. of the assessed income is satisfied. But the presumpti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d what was the accretion to his net wealth in the course of that particular year. It is only if these materials are available that it will be possible to say that there was a case of accretion to the net wealth of the assessee which was not properly explained by the assessee and a presumption would arise that the net accretion represented income of the assessee during the year under consideration. No such material exists so far as the record of the case is concerned." Applying the aforesaid ratio to the facts of the present case, it can be stated that on the basis of the assessee agreeing to have the credit entries in its books of account treated as its income, by virtue of the provisions of section 68 of the Act, the said sums shall be d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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