TMI Blog1982 (10) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,950. In computing this income, the ITO made an addition of Rs. 28,800 as income of the assessee from business not recorded in the books of account maintained by the firm including the unexplained investment in the said business. The ITO estimated the unexplained investment at Rs. 20,000 and the income from business at Rs. 8,800. On appeal, the AAC reduced the net profits from transactions outside the books to Rs. 5,500 and the unexplained investment to Rs. 8,000. The assessee preferred a further appeal to the Tribunal and there was a further reduction of Rs. 2,000 in the amount of unexplained investment in the business outside the books. When the ITO made the assessment, he initiated penalty proceedings and since the minimum imposable penalty exceeded Rs. 25,000 on the basis of his assessment order, he referred the matter to the IAC for further proceedings. The IAC, after giving a show-cause notice, invoked the Explanation to s. 271(1)(c) of the Act, as the assessee had not discharged the burden of proof under the said Explanation to rebut the presumption raised against him. It was also held that there could not be any inadvertent omission on the part of the assessee in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section." This Explanation clearly provided that where the total income returned by the assessee is less than 80% of the total income ultimately assessed as correct income, it will be presumed that there is either concealed income or the assessee has furnished inaccurate particulars of such income, unless the assessee proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. It is, therefore, plain that by the addition of this Explanation, which was added by an amendment by the Finance Act of 1964, this Explanation shifted the burden on the assessee if the returned income was less than 80% of the total income which was assessed as the correct income of the assessee. The Tribunal in its order considered the impact of this Explanation to s. 271(1)(c) and held that the assessee had no material to show that there was no intention on the part of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, yet this question of jurisdiction of the IAC was raised and, therefore, this question has been referred to this court. It is not disputed that on the date on which the reference to IAC was made, the law as it stood conferred jurisdiction on the IAC to proceed with the proceedings for penalty as it could not be disputed that the penalty is imposed under s. 271(1)(c) for not having filed the correct return and, therefore, the relevant date will be the date when the return was filed and the law which was applicable on the date of the return will govern the penalty proceedings. This view of the matter finds support from the decision of the Hon'ble the Supreme Court of India in Brij Mohan v. CIT [1979] 120 ITR I and also from the decision of our High Court reported in Sulemanji Ganibhai v. CIT [1980] 121 ITR 373. As regards the question about the jurisdiction of the IAC, in view of the modification of the order of the ITO by the Appellate Tribunal in quantum appeal, the question was considered by this court in a decision in CIT v. A. N. Tiwari [1980] 124 ITR 680. In this decision, the question that was considered was that after a reference was made to the IAC for imposition of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. If the reference was made before 1st April, 1971, it would be governed by s. 274(2) as it stood before that date and the IAC would have jurisdiction to pass the order of penalty. " And, in this decision, a reference has also been made to decisions of the Gujarat and the Andhra Pradesh High Courts. While considering the decisions of the Allahabad and the Orissa High Courts, it has further been observed that if the reference was validly made, it would not invalidate the reference and the IAC will have jurisdiction to impose the penalty even if ultimately it is found that the concealed income was, which will call for a penalty, not more than Rs. 25,000 as it was observed (p. 686): " We are respectfully unable to agree with the view taken by the Allahabad High Court in CIT v. Om Sons [1979] 116 ITR 215 (All), and the Orissa High Court in CIT v. Dhadi Sahu [1976] 105 ITR 56 (Orissa), that the IAC will not have jurisdiction to pass an order of penalty even in a pending reference if the amount of income in respect of which the particulars were concealed did not exceed Rs. 25,000. We are also respectfully unable to agree with the view taken by the Madras High Court in Continental C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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