TMI Blog1989 (1) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 12,011 levied under section 271 (1) (c) ? " The assessee is, an individual. For the assessment year 1966-67, she filed a return on November 9, 1971, declaring an income of Rs. 5,505. In the course of the examination of the accounts of the assessee, it was found that she had made investments during the year amounting to Rs. 22,140. The assessee stated that the investments were made out of her past savings out of the presents given at the time of her marriage in 1961, and by her husband and the amounts realised by her arising out of the investments of those amounts. However, the Income-tax Officer accepted the explanation offered by the assessee to the extent of Rs. 10,129 and with regard to the balance amount of Rs. 12,011, he took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 1966-67 should be deleted. On further appeal to the Tribunal by the Revenue, the Tribunal took the view that it would not suffice to establish that the quantum of addition was sustained in the quantum appeal, but that there should be evidence to show that the explanation of the assessee regarding the source of investment was false and that this amount represented concealed income of the assessee and that there was nothing on record to show that the addition sustained represented concealed income and the rejection of the explanation earlier offered by the assessee is not a ground to levy penalty under section 271 (1) (c) of the Act. The Tribunal also found that the assessee had negatively shown that there was no fraud or wilful negle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee as well as that determined by the Income-tax Officer and later sustained, it is seen that the total income returned by the assessee was less than 80 per cent. of the total income as assessed. By virtue of the Explanation to section 271 (1) (c) of the Act, which, it was not disputed, would govern this case, a presumption is raised against the assessee that the assessee is guilty of fraud or gross or wilful neglect, as a result of which income has been concealed. This, no doubt, is a rebuttable presumption, but such rebuttal must be on materials relevant and cogent. That this is the position has been clearly laid down by the Supreme Court in CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 (SC). The Supreme Court, after referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doing, the Tribunal has clearly misdirected itself since the scope and effect of the Explanation to section 271(1)(c) of the Act has been completely lost sight of and the matter had been dealt with as if the Revenue had to establish that the explanation of the assessee was false and that the amount represented by the addition was the concealed income of the assessee and that there was no material in support thereof. The Tribunal, in our view, clearly overlooked the scope and effect of the Explanation as construed by the Supreme Court in the decision referred to above and had approached the question for decision on the basis of the position in law as it stood prior to the amendments effected by the deletion of the word "deliberately" and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. We do not find any material to support this reasoning of the Tribunal and there is nothing on record to establish that even negatively the assessee had established that there was no fraud or wilful neglect in returning the correct income. Under those circumstances, the Tribunal cannot be stated to have approached the question of levy of penalty on the assessee in the proper perspective with reference to the applicability of the Explanation and its reasoning that evidence should be placed to show that the explanation of the assessee was false and that the addition represented concealed income is clearly opposed to the provision in the Explanation regarding the raising of presumptions and the rebuttal by the assessee. Likewise, the T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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