TMI Blog1976 (7) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... section 68 of the Act was in fact the income of the assessee to sustain the imposition of the penalty for concealment of such amount in the return of income? " Assessee is a firm deriving income from business in china clay and iron mines and the relevant year of assessment is 1965-66 corresponding to the accounting period ending on December 31, 1964. Assessee returned an income of Rs. 18,199 but the Income-tax Officer determined the same at Rs. 1,61,389. This amount of total income included a sum of Rs. 69,900 which the assessee claimed were cash credits, but the Income-tax Officer added it as the assessee's income under section 68 of the Income-tax Act. Penalty proceeding was initiated under section 271(1)(c) of the Act and the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his plea of the assessee was false so as to indicate that the action of the assessee in not disclosing its credits in the return arose from any fraud or any gross or wilful neglect on its part. We are of the opinion that the assessee had discharged the initial negative onus cast by the Explanation to section 271(1)(c) and therefore, the burden shifted to the revenue to prove that the amounts added were in fact the income of the assessee. There is nothing on record to show that the amounts added were in fact the income of the assessee and the revenue relied entirely upon section 68, according to which unexplained cash credits would be deemed to be the income of the assessee. In our opinion, penalty can be levied only for concealment of actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. This section gives a statutory recognition to the law as applied in the country prior to the Act of 1961. In the case of Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963] 50 ITR 1 (SC), the Supreme Court indicated that there was nothing in law. which prevented the Income-tax Officer in an appropriate case in taxing both cash credits, the source and nature of which are not satisfactorily explained, and the business income estimated by him after rejecting the books of account as unreliable. When on rejecting the explanation of the assessee as unsatisfactory, the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case and on a true interpretation of section 271(1)(c) read with sections 68 and 2(24) of the Income-tax Act, 1961, the Appellate Tribunal was not right in requiring the revenue to prove that the amount added under section 68 of the Act was in fact income of the assessee so as to warrant assessment for concealment of the same in the return of income (sic). It is appropriate at this stage to bring to the notice of the Income-tax Appellate Tribunal the fact that while penalty was being imposed by the Inspecting Assistant Commissioner he had taken into consideration the total amount of Rs. 69,900. Ultimately, the addition of a sum of Rs. 19,900 only has been sustained and if penalty is to be imposed, this fact has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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