TMI Blog1982 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... sources. The ITO also initiated a proceeding under s. 271(1)(c) for imposition of penalty and referred the matter to the IAC under s. 274(2) of the I.T. Act, 1961 (hereinafter referred to as "the Act"). During the penalty proceeding it was urged on behalf of the assessee that in the quantum appeal (meaning thereby the appeal from the assessment order) the AAC had reduced the addition of cash credit by Rs. 44,000 and had sustained the addition of Rs. 50,000 only. The IAC held that the assessee had concealed the property income by way of cash credits and had committed default under s. 271(1)(c) of the Act. He, therefore, imposed a penalty of Rs. 13,565. Aggrieved by the order of the IAC the assessee went up in appeal before the Tribunal and it was submitted that the assessee had not concealed any income as the addition was made simply on account of non-acceptance of the explanation of the assessee. In the alternative, it was argued that the penalty imposed was excessive. We are, however, not concerned in this case with this alternative limb of the argument put forth on behalf of the assessee before the Tribunal. The learned counsel for the assessee placed before the Tribunal a cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n had been found to be not satisfactory, it did not follow that the receipt constituted his taxable income and that the penalty should be imposed for concealment of income. The Tribunal also considered that even in the case of surrender there could be one hundred and one reasons for doing so and that the mere act of surrender did not amount to an admission of concealment of income. Considering the facts and circumstances of the case as well as some authorities, the Tribunal ultimately came to the conclusion that no penalty could be imposed for the cash credit which the assessee failed to prove to be genuine and the same could not be said to be concealed income. The Tribunal, therefore, cancelled the order imposing penalty passed by the IAC. Copies of the orders of the IAC and the Tribunal have been marked as annexs. A and B respectively forming part of the statement of the case. From a perusal of the appellate order of the Tribunal, annex. B, paras. 6 and 7, which need to be quoted here in extenso, it would clearly appear that the Tribunal was absolutely correct in applying the principles of law on the facts as discussed in these two paragraphs: "6. In this case the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this addition of Rs. 50,000 as sustained by the AAC and the Appellate Tribunal, we have to see whether the penalty relating to the cash credit of Rs. 50,000 can be sustained. 7. It cannot be doubted that the Explanation to section 271(1)(c) will be applicable in this case as the assessment year involved is 1964-65. The IAC has pointed out that the assessee filed the return showing loss of Rs. 15,942. From the order of the Appellate Tribunal it is evident that the cash credit of Rs. 50,000, which was sustained by the AAC, was upheld. Not only this but even the amount of Rs. 20,000 which had been deleted by the AAC was restored by the Appellate Tribunal, vide order in the departmental appeal which was disposed of by the said order of the Tribunal. Thus, it cannot be doubted that the Explanation to section 271(1)(c) is applicable in this case. But the question is whether, on the basis of addition in the cash credits, penalty can be imposed. " After taking into consideration the facts that the assessee had filed an affidavit of Shri Shanti Bhai Patel at the assessment stage which had not been accepted and the statement of Shri Birendra Narain Singh, the other alleged creditor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liability of discharging the onus on the assessee and the onus was no longer upon the Department. This is not a correct exposition of law. It has been repeatedly held, not only by this court but by several other courts, that after the insertion of the Explanation there has been some change in the law which could not be doubted but what was important was the magnitude of the change brought about and the sort of proof that was warranted or demanded from the assessee to discharge the initial onus placed by the explanation upon him. Without multiplying the cases we may refer here to two Bench decisions of this court itself which have been never dissented from and rather have been accepted in principle as laying down the correct proposition of law. In this connection reference may first be made to the case of CIT v. Patna Timber Works [1977] 106 ITR 452 (Pat.) In that case, this court was considering the effect of the insertion of the Explanation specially in view of the fact that the term " deliberately " have been omitted consciously by the Legislature by the 1964 amendment before the word " furnishing inaccurate particulars ", only some excerpts from that judgment need be quoted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingredients ; otherwise it will be permissible to draw the presumption of fact that the assessee has concealed the particulars of his income or furnished inaccurate particulars of such income. In a case where there is a difference of more than 20 per cent. in the income returned by any person and the total income as assessed under the various provisions of the Act, the Explanation is attracted. While calculating the difference of 20 per cent. between the income returned and the income assessed from the latter has got to be deducted the amount of expenditure incurred bona fide by the assessee for the purpose of making or earning income included in the total income but which has not been allowed as a revenue expense or a permissible deduction under any provision of the Act. As soon as it is found that there was a difference of more than 20 per cent. in the income returned and the income assessed, clause (c) comes into operation by the rule of presumption, in other words, by the rule of evidence engrafted in the Explanation, and it is for the assessee to prove that the failure to return the correct income, i.e., the assessed income did not arise from any fraud or gross or wilful negle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied for the proof of a positive fact while the standard of preponderance of probability is sufficient to prove a negative fact. The assessee, within the meaning of the Explanation, is required to prove that the failure to return correct income did not arise from any fraud or gross or wilful neglect on his part, that means, there is absence of fraud or gross or wilful neglect. Ordinarily and generally, there cannot be any direct evidence to prove such a fact. The assessee merely has to place materials of the primary facts or the circumstances which in all reasonable probability would show that he was not guilty of any fraud or gross or wilful neglect. He may discharge this onus by placing the facts found in the assessment order to show that the facts found therein had not in the least given an inkling of fraud or gross or wilful neglect on the part of the assessee and therefore, it must be held without proof of any other fact that there was no fraud committed by the assessee in his failure to return the correct income nor was he acting grossly or wilfully negligently. In a given case it may be necessary for the assessee to prove certain more facts because the materials in the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d materials which were on the record. The Tribunal was very much conscious of the legal position that the Explanation to s. 271(1)(c) of the Act was attracted. It was not oblivious of the fact that the initial burden of proof lay upon the assessee to prove a negative fact. It was very much alive to the legal position that the proof of such negative fact could be said to have been discharged by merely placing a preponderance of probabilities by the assessee and if that had been done then the onus shifted back on the Revenue to prove the positive fact of either fraud or gross or wilful neglect on the part of the assessee or furnishing by the assessee of inaccurate particulars. All the principles of law have been correctly applied. All the materials on the record have been duly taken notice of. The mere technicality put forward by Mr. Rajgarhia with regard to the lacking of one sentence in para. 9, namely, to the effect that the initial onus placed upon the assessee of the proving of negative fact was, therefore, discharged was too hair-splitting an argument to be entertained, it would be piling unreason upon technicality. An identical argument bad been advanced by the learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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