TMI Blog1977 (1) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that penalty under section 271(1)(c) of the Act is not leviable in this case ? " The relevant facts and circumstances in which the present application has been filed may be stated in brief as follows : The assessee carries on the business of sale of curios and presentation articles of brass, ivory and sandalwood. The assessee declared the income of Rs. 38,370 for the assessment year 1967-68. The ITO, 'A' Ward, Jaipur, found that the books of account maintained by the assessee were unreliable inasmuch as the stock register was not maintained by the assessee and it was difficult to deduce the correct income from the books. He, therefore, applied s. 145 of the Act and by estimating a gross profit rate at 12.5% added Rs. 18,525 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was concealment of income unders.271(1)(c)of the Act. As the total income returned by the assessee was less than 80% of the total income assessed by the ITO, the onus was on the assessee to prove that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. The assessee failed to satisfy the authorities concerned in this respect and, therefore, a statutory presumption was created in favour of the revenue that the assessee has concealed the income and it is for the assessee to rebut this statutory presumption by proving that his failure to return the correct income did not arise from any fraud, gross or wilful neglect on his part. According to Mr. Lodha, the Tribunal has observed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue but this presumption is a rebuttable one and has to be rebutted by the assessee. The assessee has kept regular books of account and vouchers, etc., except the stock register as has also been noted by the ITO and an amount of Rs. 18,525 was added on the basis of estimate of gross profit rate and that an amount of Rs. 10,199 was disallowed by the ITO under the head " Expenditure " and was thus added to the income. These circumstances, in the opinion of the learned counsel, do not in any way lead to an inference that there was any fraud or gross or wilful neglect on the part of the assessee, rather they themselves go to rebut the presumption. It depends upon the facts and circumstances of each case as to what amount of evidence, direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delines in considering such matters. It may, however, be said that in the light of these guidelines each case has to be judged on it own merits. There can also be no dispute that the Explanation to s. 271(1)(c) of the Act, as added from April 1, 1964, now places on the assessee the burden of proving that the failure to return the correct income did not arise from any fraud or wilful neglect of the assessee, where the total income returned is less than 80% of the total income assessed. It has been held in CIT v. K. C. Behera [1976] 103 ITR 479 (Orissa) that the Tribunal should have determined the validity of the penalty with reference to law as it was subsequent to the amendment. The case of Parimisetti Seetharamamma [1965] 57 ITR 532 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sciously understated its income. The addition was entirely on estimate basis by applying enhanced gross profit rate. The possibility of error in good faith on the part of the assessee cannot be ruled out. No manipulation in the account was either brought out which could be a pointer to mala fides on its part. " The order of the Tribunal is of April 21, 1972. The disparity between the income returned and the income assessed was less than 80% (sic) and it related to the assessment year which was governed by the Explanation. We have no doubt in our mind that when the Tribunal set aside the imposition of penalty, it was aware of the existence of the Explanation. No doubt the Explanation now places on the assessee the burden of proving that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IAC, Jaipur Range I, to the tune of Rs. 13,000. This penalty was, however, cancelled by the Appellate Tribunal. An application under s. 256(2) of the Act was made before this court and it was held by this court that it was purely a finding of fact and no question of law did arise and the court declined to direct the Tribunal to refer the aforesaid question. In the present case also, the Tribunal considered the facts and circumstances of the case in the light of the presumption and in the ultimate analysis it appeared to the Tribunal that the facts and circumstances appearing on the record of the case were adequate to rebut the presumption of fraud, wilful or gross neglect. The Tribunal, however, felt satisfied that the presumption raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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