1981 (11) TMI 80

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..... have been filed against the order of the AAC confirming the penalty of Rs. 5,000 imposed by the ITO under s. 271(1) (c) of the IT Act for the asst. yr. 1965-66nd the penalty of Rs. 147 imposed under the aforesaid provisions for the asst. yr. 1966-67. 3. The relevant facts are that for the asst. yr. 1965-66, the ITO made an addition of Rs. 13,750 in computing the total income of the assessee on t .....

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..... ear 1946 as a Railway Official. The AAC rejected this explanation on the ground that if the assessee had really saved any part of his travelling and daily allowances, he should have included the amounts so saved in his return of income for the relevant year in which he had received the said allowances. He, therefore, held that the assessee had failed to substantiate his explanation regarding the s .....

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..... CTR (Cal) 228: (1981) 130 ITR 602 (Cal), where in it has been held that the fiction contained in s. 69 of the IT Act, deeming unexplained investment to be the income of the assessee, had to be taken into account in penalty proceedings also. The ld. Deptl. Rep. contended that having regard to the principles laid down by the Calcutta High Court in the above mentioned case, the ITO and the AAC were j .....

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..... war Ali (1970) 76 ITR 696 (SC), the Supreme Court have held that the department must establish that the receipt of the amount in dispute constituted income of the assessee. According to the Supreme Court, if there is no evidence on the report except the explanation given by the assessee, which explanation has been found to be false, it does not follow that the receipt constituted his taxable incom .....

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..... stified. Hence, even though the order of the AAC has became final, we hold that the department has not been able to establish that the aforesaid additions were really justified and that the amounts represented the assessee's concealed income. We accordingly cancel the penalty imposed by the ITO for the asst. yrs. 1965-66 and 1966-67. 9. In the result, both the appeals are allowed.
Case laws, .....

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