TMI Blog1987 (6) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... he Madras airport. sum of Rs. 1,50,000 along with certain documents were recovered from him. The documents showed that the assessee had made a remittance of Rs. 33,500 through banks by three separate drafts. Proceedings under section 132 of the Income-tax Act were initiated. The assessee contended that the amounts belonged to his uncle. The Income-tax Officer, Quilon, rejected the said plea and passed an order on May 20, 1970, under section 132 of the Act, estimating his income at Rs. 2,45,500. The sum of Rs. 1,50,000, recovered from the person of the assessee, was retained to meet the income-tax liability for the assessment year 1970-71. Thereafter, proceedings were initiated by issuing a notice under section 148 of the Income-tax Act. The assessee filed a return. He did not include in his return the sum of Rs. 1,50,000 or Rs. 33,500, nor did he claim any exemption for the same on the ground that it belonged to his uncle in the course of assessment proceedings, the explanation about the nature and source of Rs. 1,50,000 and Rs. 33,500 was found to be unsatisfactory. So, the said amount of Rs. 1,83,500 was included as the income of the assessee for the said year. The said additions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that no concealment was proved in this case and, if at all, this is only a case of unsatisfactory nature of the explanation or the inability of the assessee to prove to the hilt the claim made by him. On the facts of the case and bearing in mind the decisions of courts, the Appellate Tribunal held that no penalty is exigible. This is a pure finding of fact. On the basis of the facts found, the cancellation of the penalty was justified and legal. Having heard the rival contentions of the parties, we are of the view that the plea of the Revenue should fail. Before we embark upon an analysis of the factual details of the case, it will be useful to bear in mind the scope of section 27](1)(c) of the Income-tax Act, read along with the Explanation, as it existed during the assessment year 1970-71. The law has been laid down authoritatively in the recent decision of the Supreme Court in CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14. The section has been quoted verbatim on page 19 of the report. The Supreme Court held at page 19 as follows : " Before the amendment, difficulty arose and it is not necessary to trace the history. Under the law as it stood prior to the amendment of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Haryana High Court is the correct view when it states that it only makes a presumption but the presumption is a rebuttable one and if the fact-finding body on relevant and cogent materials comes to the conclusion that in spite of the presumption the assessee was not guilty, such conclusion does not raise any question of law." Summing up, the Supreme Court held on page 22 to the following effect: " The position, therefore, in law is clear. If the returned income is less than 80% of the assessed income, the presumption is raised against the assessee that the assessee is guilty of fraud or gross or wilful neglect as a result of which he has concealed the income but this presumption can be rebutted. The rebuttal must be on materials relevant and cogent. It is for the fact-finding body to judge the relevancy and sufficiency of the materials. If such a fact-finding body bearing the aforesaid principles in mind comes to the conclusion that the assessee has discharged the onus, it becomes a conclusion of fact. No question of law arises. In this case, the Tribunal has borne in mind the relevant principles of law and has also judged the facts on record. It is not a case that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncealed the particulars of such income or furnished inaccurate particulars of such income. Proceeding on the basis that the income returned by the assessee is less than 80% of the total income as assessed, it should be stated that the assessee should initially prove that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. Unless it is so shown, the assessee shall be deemed to have concealed the particulars of the income or furnished inaccurate particulars of such income. It is only a presumption. The burden is cast on the assessee to prove a negative fact. This can be discharged either by independent evidence led during the penalty proceedings or by a closer scrutiny or appraisal of the existing facts and data available. This will take in even the materials available at assessment stage. The presumption under the Explanation to section 271 (1)(c) can be displaced by the assessee proving that the failure to return the correct income did not arise from any fraud or gross or wilful neglect and the quantum of proof necessary would be that required in a civil case, namely, preponderance of probabilities-CIT v. Sankarsons [1972] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of the nature and source of the amount. There is nothing to show that the plea of the assessee is false or inherently impossible. The Appellate Tribunal held that the Explanation to section 27 I (1)(c) is also of no avail in this case because there is nothing on record to show that the failure to return the correct income did arise from any fraud or gross or wilful neglect on the part of the assessee. Considering these facts and circumstances, it was concluded that this is only a case of unsatisfactory nature of the explanation or the inability of the assessee to prove to the hilt the claim which he made before the Income-tax Officer and there is no positive material to think that the sum of Rs. 1,50,000 is the income of the assessee. We are of the view that it will be irrational and illogical for any reasonable person to hold that the assessee should have disclosed in the return furnished by him, unmindful of the facts and circumstances, that these amounts represent his income and so by the same token it is not possible to hold that the failure to do so, is concealment of income or omission in that regard, and would amount to concealment or furnishing inaccurate particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
