TMI Blog1992 (1) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of levy of penalty nor before the Appellate Assistant Commissioner? " The assessee, Messrs. Bombay Pipe Traders, Nagpur, returned an income of Rs. 54,447 for the assessment year 1971-72. The Income-tax Officer made additions to the tune of Rs. 16,993 on account of defects in the account books. He also made the following four additions on specific grounds: Rs. (i) Inflation of purchases 2,000 (ii) Inflation of purchases and deflation of sales 1,037 (iii) Inflation of expenses under railway freight 2,034 (iv) Unexplained cash credits 2,280 Specifically in respect of the above four additions, namely, of Rs. 2,000, Rs. 1,037, Rs. 2,034 and Rs. 2,280, the Income-tax Officer initiated penalty proceedings under section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted to justify the penalty on the basis of the Explanation to section 271(1)(c). The Tribunal held that under the circumstances this would amount to making out a new case which could not be permitted. Section 271(1)(c) along with the Explanation, as it existed at the material period, read thus: " 271. Failure to furnish returns, comply with notices, concealment of income, etc.--(1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person-- . . . . (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,-- . . . . (iii) in the cases referred to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult of which, where the total income returned by an assessee was less than 80 per cent. of the total income assessed, the onus was on him to prove that the failure to file the correct income was not due to fraud or any gross or wilful neglect on his part. The Explanation thus raises a presumption which is rebuttable and not conclusive. Moreover, the Explanation does not come into play merely because the returned income is less than 80 per cent. of the assessed income. It applies only after recalculation of the assessed income by reducing it by the expenditure incurred bona fide by the assessee for the purposes of earning any income included in the total income which has been disallowed as deduction by the Income-tax Officer. In the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal to the question of penalty in this case. In the facts and circumstances of this case, the Tribunal was right in not considering the Explanation for the first time, though theoretically, in an appropriate case, the Explanation may be pressed into service for the first time at the appellate stage. In this connection, following three decisions of the Allahabad High Court, rendered in somewhat similar circumstances, may be noticed: (1) CIT v. G. L. Textiles [1977] 109 ITR 37; (2) CIT v. Hari Ram Sri Ram [1987] 167 ITR 578; and (3) Addl. CIT v. Mohd. Shafi Mohd. Nabi [1991] 192 ITR 102. We may at this stage also notice the following observations of the Supreme Court made in the context of section 271(1)(c) in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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