TMI Blog1978 (2) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... applications, in brief, are as follows: The assessee is the wife of Goswami Shri Brij Bhushan Lalji Maharaj of Kankrauli, the religious head of Pushti Marg Sampraday of Vaishnavites. The famous temple at Kankrauli belongs to this particular sect. The devotees and followers are mainly from the western region and particularly from Gujarat and Bombay. The books of account maintained in respect of the temple at Kankrauli are known as " Shri Krishan Bhandar ". The assessee maintained no accounts for a number of years, but has started maintaining some accounts after Samwat 2020 relevant to the assessment year 1965-66. She is a pardanashin lady and is supposed to preach to the religious women followers of this particular sect. The devotees or the followers of this particular sect offer bent which may be described as gifts or offerings to the lady on occasions like birth, marriage and similar other occasions. The birth of a male child in the family of religious head, it is said, is considered by the devotees as " Krishna Janam ". The assessee has been investing in lands, shares, properties, etc., and has also bank accounts. She has borrowed money on mortgage and she has also lent money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of penalty is not justified. We delete the penalties imposed u/s. 271(1)(c)." In support of these reference applications, Shri S.K.Mal Lodha, learned counsel for the revenue, strenuously contends that a question of law undoubtedly arises from the order of the Tribunal in as much as there was an error in not applying the Explanation to s. 271(1)(c), which reads as follows : " 271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person- . ...... (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,-...... Explanation.-Where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC), Omar Salay Mohamed Sail v. CIT[1959] 37 ITR 151 (SC), Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC) and CIT v. Anwar Ali [1970] 76 ITR 696 (SC). It is further pointed out that their Lordships in Addl. CIT v. Chandra Vilas Hotel [1978] 115 ITR 118 (SC) had called upon the High Court to refer an identical question under s. 256(2) as being a question of law. We are afraid, none of these contentions can be accepted. There is no need for us to deal with the decisions relied upon as the principles are well settled. In reply, Shri Kaji, learned counsel for the assessee, rightly contends that it is not a question of the Explanation to s. 271(1)(c) of the Act not being looked at or not being applied. According to him, the question as framed does not arise from the order of the Tribunal at all. It is pointed out that nobody invoked the Explanation. He fairly concedes that the findings in the quantum appeals are not conclusive but they are good evidence as held by their Lordships in CIT v. Anwar Ali [1970] 76 ITR 696 (SC). Further, he contends that the Tribunal's findings are based on the totality of evidence. According to him, the assessee had three sources of income, viz., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i), but it has a bearing only on (ii). The Explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does ....... (b) Alternatively, even treating the Explanation as dealing with both the ingredients (i) and (ii) set out above, where the circumstances do not lead to the reasonable and positive inference that the assessee's explanation is false, the assessee must be held to have proved that there was no fraud or gross or wilful neglect on his part. Even in this view of the matter the Explanation cannot justify the levy of a penalty." That, in our view, is the true legal position. The above interpretation of the Explanation was accepted in Addl. CIT v. Karnail Singh [1974] 94 ITR 505 (P H), which held that the Explanation does not entirely supersede the ratio of CIT v. Anwar Ali [1970] 76 ITR 696 (SC). As Palkhivala rightly points out, in order to justify a levy of penalty, there must be some materials or circumstances lead ..... X X X X Extracts X X X X X X X X Extracts X X X X
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