TMI Blog1978 (7) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ced on appeal. On further appeal, the Tribunal upheld the inclusion in relation to two cash credit items, namely : (1) of Rs. 16,350 relating to Sri Ram Lal, leather merchant, Agra, (2) of Rs. 8,510 of Chimanlal, leather merchant, Agra. Thus, the inclusion as income from other sources was reduced from Rs. 71,834.95 to Rs. 24,860. The Tribunal also upheld the inclusion of Rs. 8,423 on account of bonus received by the assessee as a result of the devaluation of Indian currency. This receipt was held to be clearly revenue in nature and includible in the total income of the assessee. Meanwhile, the IAC initiated penalty proceedings, and ultimately levied a penalty of Rs. 57,000, because the amount of income concealed was, in his opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal was right in cancelling the penalty levied under section 271 (1)(c) of the Act of 1961 ? (2) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the Explanation to section 271 (1)(c) of the Act was not applicable to the instant case ? " The Tribunal has dealt with the case also on the footing that the Explanation was applicable. We may at first deal with this aspect. Ultimately, three items were added as income from undisclosed sources : Rs. (1) Ram Lal, leather merchant, Agra 16,350 (2) Chimanlal, leather merchant, Agra 8,510 (3) Bonus 8,423 In respect of the first two items, the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y debatable matter. It was not clear whether such receipts are incidental to trade or business. The explanation of the assessee in this respect was believable, and hence the assessee was not guilty of fraud or gross or wilful negligence, even though he may be guilty of ordinary negligence. It concluded that the levy of penalty under the Explanation was also not warranted. The finding that the assessee was not guilty of fraud or gross or wilful negligence is based on a consideration of the relevant material and circumstances of the case. It is, in our opinion, a finding on a question of fact. We have heard learned counsel, but we are not satisfied that the finding is vitiated by any error of law. On this finding no penalty was leviable eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urned income is less than 80 per cent. of the assessed income. The consequence follows as a matter of law. The burden of proving lack of fraud or gross or wilful negligence is on the assessee. If he fails, the presumption that he concealed the income or furnished inaccurate particulars thereof is bound to be drawn. Section 274 provides that no order imposing penalty shall be made under this chapter unless the assessee has been heard or has been given reasonable opportunity of being heard. There is no provision for drawing up a charge sheet. The assessing authorities have to give notice and to afford an opportunity of hearing to the assessee. If the notice informs the assessee that penalty proceedings are being initiated because of his con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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