TMI Blog1985 (10) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... he accounting period relevant to the assessment year 1970-71, the Income-tax Officer noticed a cash credit of Rs. 10,000 in the name of one Gurdial Singh on March 23, 1970. The assessee explained that the loan was taken by him for purchasing a shop worth Rs. 15,000 and that actually the purchase was effected on May 23, 1970. The creditor was produced and was subjected to examination by the Income-tax Officer and he admitted having advanced a friendly loan of Rs. 10,000. A statement of Kirpal Singh, father of the creditor, Gurdial Singh alias Hardial Singh, was recorded in his village by an Inspector of Income-tax at the back of the assessee. Kirpal Singh stated that he had no knowledge of his son having given a sum of Rs. 10,000 to the assessee. Though the assessee made specific written request dated March 3, 1975, he was not given the necessary opportunity of cross-examining the said Kirpal Singh. During the assessment proceedings, in addition to the above-noted credit of Rs. 10,000, the Income-tax Officer noticed three other items of cash credits totalling Rs. 10,300 and treated all the credits totalling Rs. 20,300 as "unexplained". The Appellate Assistant Commissioner, however, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced in extenso, it is not necessary to set out the same here. The Tribunal dealt with the contention of the Revenue to the effect that the Explanation to section 271(1)(c) of the Act was attracted as the assessed income exceeded 20% of the returned income and the assessee had led no evidence that such assessment did not result from any fraud, or gross or wilful neglect on his part and by observing that since the Income-tax Officer did not take any support from the Explanation to the said section for levying the penalty and the Explanation was not pressed into service before the Appellate Assistant Commissioner, it held that no contention on the basis of the said provision could be entertained before the Tribunal. We think it proper to reproduce a part of the order of the Tribunal which deals with this contention : " The penalty under section 27l(1)(c) necessarily has to flow from the satisfaction of the Income-tax Officer and, therefore, the type of satisfaction he records becomes the fountain head and the basis for passing an order under section 271(1)(c). Now, in this case, such satisfaction was that the assessee concealed particulars of his income and it was on the recordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities levying penalty exceed the minimum on the ground that the circumstances of the case do not justify the minimum imposable one, it means that the elements of discretion are exercised and once that happens, it must be assumed that the Revenue took it upon itself to prove the concealment. Here, we may further observe that where the Revenue frames a charge of actual concealment against a taxpayer, then, in addition to penalty, the taxpayer may be prosecuted finder section 276 which course may not be open if the assessee is penalised under the fiction of the Explanation to section 271(1)(c)." The Tribunal accordingly held that, on the facts, there was no case made out against the assessee under the main provision of section 27](1)(c) of the Act and that the Revenue did not even attempt to discharge, much less discharge, the onus that the assessee was guilty of concealing his income by filing wrong particulars of his income and that the order of the Appellate Assistant Commissioner cancelling the penalty did not suffer from any infirmity calling for interference by the Tribunal. In the statement of the case submitted by the Tribunal, it is again observed as under: " On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is rebuttable." It is also proper to refer to the judgment of the Gujrat High Court in Kantilal Manilal v. CIT [1981] 130 ITR 411, wherein it has been held as under (headnote): "The Explanation to section 271(1)(c) of the Income-tax Act, 1961, enacts a rule of evidence and the authority which imposes penalty is competent to invoke its aid in reaching the final conclusion on the question of concealment, although it may not have been resorted to at the stage when the reference was made to the authority imposing the penalty. Therefore, merely because the Explanation has not been referred to in the show-cause notices, there is no legal bar against invoking the Explanation during the course of the penalty proceedings." The Division Bench of the Gujarat High Court has held in CIT v. Drapco Electric Corporation [1980] 122 ITR 341, that (headnote at p. 344): Since the Explanation enacts merely a rule of evidence, it is competent to the authority which imposes the penalty to invoke its aid in reaching the final conclusion on the question of concealment, although the Income-tax Officer may not have resorted to it at the stage when he made the reference to the authority." In CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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