TMI Blog1978 (5) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's income lay on the department ? " The assessment year in question is the year 1964-65. The assessee who carried on money-lending business filed a return showing an income of Rs. 1,326 from property and a loss of Rs. 255 from business. The ITO, however, completed the assessment on a total income of Rs. 52,931. This amount was computed by making the following addition: Rs. 25,000 on account of unexplained investment treated as income from undisclosed sources; Rs. 14,748 on account of difference in the balance-sheet; Rs. 6,000 for low rate of interest shown; Rs. 5,000 disallowed out of expenses claimed. The assessee filed an appeal against the assessment order. The AAC deleted both the additions of Rs. 5,000 and Rs. 6,000 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t solely for the purposes of keeping it in the form of cash at her home. In his view, the withdrawals in the earlier years were utilised for the purpose for which they were made. He also took the view that inasmuch as the returned income was less than 80% of the assessed income, the Explanation to s. 271(1)(c) of the Act applied, and the onus lay upon the assessee, which had not been discharged by her. In view of this finding, he imposed a penalty of Rs. 15,000. The assessee preferred an appeal to the Tribunal. The Tribunal held that although the explanation of the assessee in respect of the deposit made was rejected for assessment purposes, that by itself would not justify inclusion of the amount for levy of penalty. Following the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section." As the assessment year involved in the present case is 1964-65, the Explanation applied to the proceedings. Anwar Ali's case [1970] 76 ITR 696 (SC) dealt with penalty proceedings for the year 1947-48 under s. 28(1)(c) of the Indian I.T. Act, 1922. It was held that if there was no evidence on the record except the explanation given by the assessee, which explanation was found to be false, it did not follow that the receipt constituted taxable income, and further that the finding given in the assessment proceedings for determining or computing the tax was not conclusive in penalty proceedings, although it was a piece of evidence which can be considered in those proceedings. It was held that the entirety of the circumstances must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of the Explanation to s. 271 had been considered in a number of cases. In CIT v. Sankersons Co. [1962] 85 ITR 627 (Ker) it has been held that the Explanation places the burden of proving that the failure to return the correct income did not arise from gross and wilful neglect upon the assessee. The presumption raised by the Explanation could, however, be displaced by the assessee by leading relevant evidence, and the quantum of proof necessary would be that which is required in civil cases, i.e., preponderance of probability. In the case of Addl. CIT v. Karnail Singh [1974] 94 ITR 505 (Punj) it was held that the Explanation inserted by the Amending Act was not intended to get over the decision of the Supreme Court in Anwar Ali's cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the Explanation added to s. 271(1)(c). In the present case, the Tribunal has knocked off the penalty on the ground that the department had not established that the receipt of the amount in dispute constituted the income of the assessee and as such was taxable. From the order passed by the Tribunal, it does not appear that it took into account the Explanation added s. 271(1)(c) which raises a presumption in cases where the returned income is less than 80% of the assessed income. It appears that the Tribunal focussed its attention solely to the question as to whether the department had in the penalty proceeding established that the amount in respect of which penalty was imposed constituted the taxable income of the assessee. It held th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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