TMI Blog1998 (8) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... ng addition in rejecting the assessee's explanation in quantum appeal ?" The assessee derives income from crockery business. For the assessment year 1979-80, to which this reference relates, it submitted a return showing turnover of Rs. 4,37,285 and gross profit at 10.5 per cent. The Assessing Officer found that the income shown was not correct. He estimated the sale and gross profit at Rs. 5,12,500 and at 15 per cent. respectively. In view of the discrepancy between the income returned and the income asssessed, he initiated penalty proceedings under section 271(1)(c) of the Act and, ultimately, imposed penalty of Rs. 11,290. The Appellate Assistant Commissioner confirmed the order. The Tribunal, however, cancelled the penalty holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 271(1), with which we are concerned in this case, initially made the assessee liable to imposition of penalty for concealing the particulars of his income or deliberately furnishing inaccurate particulars. The word "deliberately" was omitted in 1964 and an Explanation was inserted. The Explanation laid down that where the total income returned by any person was less than 80 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), 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llaneous Provisions) Act, 1986, the above proviso was deleted and clause (B) of the Explanation quoted above, was also suitably amended. The amended clause (B) reads as follows : "such person offers an explanation which he is not able to substantiate (and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him)." (words within brackets added by the amendment). The question referred for opinion, as noted at the outset, is as to whether in view of Explanation 1(B) appended to section 271(1)(c) of the Act as applicable during the relevant assessment year, the Tribunal committed an error in cancelling the penalty. The conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit rate to be low. This had led him to make a trading addition. The addition had been sustained by the Tribunal but it does not follow from those that the books of account which the assessee produced gave out inaccurate particulars of total income. The assessee had, no doubt, given an explanation in which he refuted the charge that he had given any inaccurate particulars. According to him, it was the trading necessity as well as prevailing conditions of market which were accountable for the decline in the gross profit rate. It was not the case of the Revenue that any purchase or sales were found omitted from their being accounted for in the books. The addition has followed on the basis of the estimate. Those facts could not lead to a f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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