Orissa High Court
Commissioner Of Income-Tax vs Ketini Krishnamurty And Partners on 13 August, 1974
Equivalent citations: [1976]103ITR487(ORISSA)
JUDGMENT G.K. Misra, C.J.
1. The question on which statement of fact was called for by this court was as follows :
" Whether, in the facts and circumstances of the case, the levy of penalty could be deleted on the footing that it was not exigible ? "
2. Facts material to the aforesaid question may be narrated in brief. The assessment year is 1962-63. The assessment was completed on February 15, 1963, under Section 143 of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act"), for a sum of Rs. 70,422. In response to a notice under Section 147(a) read with Section 148 of the Act the assessee filed a return on November 16, 1964. Assessment was completed under Section 147(a) on March 8, 1968, on a total income of Rs. 1,26,322. The break up of the aforesaid amount was as follows :
Rs.
(i) Net income as originally assessed ...
70,422
(ii) Cash credits ...
44,900
(iii) Unexplained investment on house construction ...
11,000 1,26,322
3. The Appellate Assistant Commissioner in appeal reduced the cash credit by Rs. 22,000, on July 30, 1969, and thus the total assessable income came down to Rs. 1,04,322. In further appeal, the Income-tax Appellate Tribunal deleted the amount of Rs. 11,000 on house construction. Thus, the total income ultimately assessed was Rs. 93,322. To be specific, the difference between the net income as originally assessed and the income as finally determined comes to Rs. 22,900.
4. On March 8, 1968, a penalty proceeding was initiated under Section 271(1)(c) of the Act by the Income-tax Officer for concealment of cash credit and in respect of unexplained investments and also the incorrectness of the return. The matter was referred to the Inspecting Assistant Commissioner under Section 274(1) of the Act. A penalty of Rs. 40,000 was imposed on a finding that the assessee deliberately concealed income. In appeal, the Tribunal held that the onus was on the revenue and from the mere fact that the ultimate income assessed was more than the income originally assessed an inference cannot be drawn that the suppression was fraudulent. The Tribunal, accordingly, deleted the entire penalty. The revenue has come up in this reference.
5. The law as to the meaning of Section 271(1)(c) of the Act was very much in obscurity. The legal position as explained in some of the earlier Supreme Court decisions was made applicable to Section 271(1)(c) despite radical changes brought in by the amendment. A Bench of this court examined the legal position in Commissioner of Income-tax v. K.C. Behera, [1976] 103 ITR 479 (Orissa).
It is not necessary to repeat the reasonings given therein. It would be sufficient to say that this court laid down in unmistakable terms that the onus was under the Act on the assessee to establish that the suppression was not deliberate. This onus, doubtless, is not, as in a criminal case, to be established beyond reasonable doubt, but is to be in accordance with the preponderance of probabilities as applicable to a civil suit. We would, accordingly, answer the question in the negative by saying that in the facts and circumstances of the case the levy of penalty could not be deleted on the footing that it was not exigible.
6. Our aforesaid answer may cause some injustice to the assessee. The Tribunal is the final court of fact. It did not examine the facts keeping the correct law in view. Even if the onus is on the assessee, the onus may be discharged if the explanation furnished by the assessee is accepted or if the case of the assessee is established from other materials available on record. This is a fit case which the Tribunal should hear again keeping the correct law in view. The case would, therefore, go back to the Tribunal to hear the parties after giving them notice. The reference is accordingly answered. In the circumstances, there will be no order as to costs.
B.K. RAY, J.
7. I agree.