TMI Blog1992 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1967-68, it appears to me that you have concealed the particulars of your income or deliberately furnished inaccurate particulars of such income and whereas the penalty proceedings have to be referred to the Inspecting Assistant Commissioner of Income-tax according to sub-section (2) of section 274 of the Income-tax Act, 1961, you are hereby informed that the case for levy of penalty under clause (c) of sub-section (1) of section 271 is being referred to by me to the Inspecting Assistant Commissioner of Income-tax, (Central) Range-II, Bombay. Further proceedings in regard to the levy of a penalty will take place before the said Inspecting Assistant Commissioner of Income-tax as provided in sub-section (2) of section 274." The Inspecting Assistant Commissioner also gave to the assessee notice dated March 17, 1972, under section 274(2) read with section 271 of the Income-tax Act, 1961. This notice also stated as follows : "Whereas the Income-tax Officer, Section XVI (Cent.), Bombay, has, under sub-section (2) of section 274 of the Income-tax Act, 1961, referred your case to me in connection with the penalty proceedings under clause (c) of sub-section (1) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfaction that there was any concealment within the meaning of the Explanation to section 271(1)(c), and hence the Inspecting Assistant Commissioner exceeded his jurisdiction in calling in aid the Explanation to section 271(1)(c). The Tribunal, therefore, set aside the levy of penalty under the Explanation to section 271(1)(c). From the above findings, the following question has been referred to us under section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the Inspecting Assistant Commissioner was not competent to call in aid the Explanation to section 271(1)(c) and levy penalty when the Income-tax Officer while initiating the proceedings had not done so ?" In order to answer this question, it is necessary to examine the relevant provisions of section 271 as in force at the relevant time : "Section 271.-(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 di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concealed his income or has furnished inaccurate particulars of his income. The burden of rebutting this presumption is on the assessee who must establish that his failure to return more than 80 per cent. of the assessed income was not on account of either any fraud or any gross or wilful neglect on his part. The Explanation, therefore, casts, in certain circumstances, a heavy burden on the assessee to establish absence of fraud or gross or wilful neglect on his part. This Explanation cannot in any manner be said to be merely an elucidation of what was already contained in section 271(1)(c), as contended by the Department. Dr. Balasubramaniam contended that this was an Explanation to section 271(1)(c) and, therefore, we must hold that the Explanation merely explains the words used in section 271(1)(c). He submitted that the intention of having the Explanation is to clear up the ambiguity in the section and, therefore, the Explanation to section 271(1)(c) need not be separately referred to in the notice which was issued by the Income-tax Officer as well as by the Inspecting Assistant Commissioner to the assessee in the penalty proceedings. He relied upon a passage at page 50 of Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that, where the total income returned by any person was less than 80 per cent. of the total income assessed, the onus was on such person to prove that the failure to file the correct income did not arise from any fraud or gross or wilful neglect on his part. Therefore, the Explanation makes a substantial difference to what was originally contained in section 271(1)(c). In our view, it was essential for the Department to have given notice to the assessee of the fact that penalty proceedings were started against the assessee under the Explanation to section 271(1)(c). Instead, the assessee was merely given a notice under section 271(1)(c). In our view, the Tribunal was justified in coming to the conclusion that the Inspecting Assistant Commissioner was not competent to have assumed jurisdiction to call in aid the Explanation to section 271(1)(c) for the purposes of levy of penalty against the assessee when the notice to the assessee was only in respect of penalty proceedings under section 271(1)(c). The learned advocate for the assessee had drawn our attention, in this connection, to a decision of the Gujarat High Court in the case of CIT v. Lakhdhir Lalji [1972] 85 ITR 77. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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