Patna High Court
Commissioner Of Income-Tax vs Tulshi Sao Munshi Sao on 5 May, 1986
Equivalent citations: [1987]165ITR496(PATNA)
JUDGMENT Ashwini Kumar Sinha, J.
1. This is a reference under Section 256(2) of the Income-tax Act, 1961.
2. By order dated December 20, 1976, this court directed the Appellate Tribunal to state a case and refer the following question of law to it for its decision :
"Whether, on the facts and in the circumstances of this case, the Tribunal was correct in law in holding that the provisions of Section 271(1)(c) were not attracted ?"
3. Accordingly, the Appellate Tribunal, Patna Bench "B", proceeded to draw up a statement of the case which was sent to this court.
4. In the present case, the assessment year in question is 1968-69. The assessee filed the return for the year 1968-69 showing a loss of Rs. 690 from business only. Thereafter, on August 27, 1971, the assessee again filed a revised return showing a total income of Rs. 10,284, out of which Rs. 4,340 comprised of income from house properties and Rs. 5,944 from business.
5. The assessment was, however, completed on an income of Rs. 26,010. Penalty proceedings under Section 271(1)(c) of the Income-tax Act (hereinafter referred to as the Act) were initiated by the Income-tax Officer and the matter was referred to the Inspecting Assistant Commissioner as the minimum penalty leviable exceeded Rs. 1,000. The Inspecting Assistant Commissioner considered that it was within the knowledge of the Department that the assessee had concealed income from business and property (in the original return) and that, in these circumstances, a revised return was filed by the assessee. The Appellate Tribunal, in the meantime, reduced the total income of the assessee from Rs. 26,010 to Rs. 20,010. The Inspecting Assistant Commissioner held that the income of Rs. 20,010 was the concealed income of the assessee against the loss of Rs. 690 shown in the original return and, accordingly, levied a penalty of Rs. 20,010.
6. It will be pertinent to mention here that the assessee did not submit any explanation, whatsoever, for the consideration of the Inspecting Assistant Commissioner for the revised return. It will be also pertinent to mention here that the assessment year in question is, admittedly, after the amendment to Clause (c) of Section 271(1) of the Act, which came into force on April 1, 1964.
7. At the appellate stage before the Tribunal, the submission advanced on behalf of the assessee was that the income determined at Rs. 20,010 was merely by way of an estimate and, in that view of the matter, no penalty could be levied under Section 271(1)(c) of the Act. Further submission advanced on behalf of the assessee was that there was no gross or wilful neglect on the part of the assessee.
8. The Tribunal accepted the assessee's submission and relied upon the case of Shanker Lal Kejriwal v. CIT [1964] 54 ITR 541 (Pat) and held that the Department had not brought home the concealment and had not established that the income estimated by it was the true income of the assessee. At this stage, it will be pertinent to mention that the Tribunal, in its order, while considering the case of the assessee for the assessment year in question, has nowhere found that the explanation of the assessee was an acceptable one. In fact, the Tribunal could not say so, as factually no explanation has been advanced by the assessee. A perusal of the Tribunal's order, while dealing with the assessee's case for the assessment year in question, shows that the Tribunal has accepted the assessee's submission that the onus lay upon the Department even though, as already stated above, the assessment year in question is admittedly after the amendment, effective from April 1, 1964, to Clause (c) of Section 271(1) of the Act.
9. At the outset, it must be held that the Tribunal wrongly relied upon the case of Shanker Lal Kejriwal v. CIT [1964] 54 ITR 541 (Pat). In that case, the assessment years in question were 1945-46 and 1946-47 and the penalty proceeding started against the assessee was under the Indian Income-tax Act, 1922.
10. By amendment to Section 271(1)(c) of the Act on April 1, 1964, the word "deliberately" was omitted and an Explanation thereto was added. This amendment brought a change in the existing law as it then was. By the Explanation added on April 1, 1964, to Section 271(1)(c) of the Act, the burden of proof was shifted from the Revenue on to the shoulder of the assessee in the class of cases where the returned income was less than 80 per cent. of the income assessed by the Department. The Explanation raises three rebuttable presumptions, viz., (i) that the amount of the assessed income is the correct income and it is, in fact, the income of the assessee himself ; (ii) that the failure of the assessee to return the correct income was due to concealment of the particulars of his income on his part ; and (iii) that such failure of the assessee was due to furnishing inaccurate particulars of such income. The onus of proof for rebutting the presumptions lies squarely on the assessee. It is true that the burden can be discharged by preponderance of evidence.
11. Once the Explanation is attracted, the law raises a legal presumption that the assessee was guilty of concealing the particulars of his income and thus the onus to dislodge that presumption is placed squarely on the assessee and it is on him to show that this has not arisen from any fraud or wilful neglect on his part.
12. I have already stated above that the assessee has advanced no explanation, whatsoever, in this case. Even if any explanation would have been advanced, it is not the law that any and every explanation of the assessee must be accepted. The explanation of the assessee for the purpose of avoidance of penalty must be an acceptable explanation.
13. It is true that there have been some cases taking a view that once the initial onus was discharged by the assessee, the onus shifted on to the Department, as observed in the case of CIT v. Anwar Ali [1970] 76 ITR 696 (SC). Yet other cases of this court took a contrary view, in view of the amendment brought in Section 271(1)(c) of the Act on April 1, 1964. Consequently, the matter was referred to the Full Bench in the case of CIT v. Nathulal Agarwala & Sons [1985] 153 ITR 292 (Pat) and the matter has once for all been resolved and, in short, the ratio decided by the Full Bench of this court in the case just mentioned above, is that once the Explanation to Section 271(1)(c) of the Act was attracted, no burden lay on the Revenue and indeed it was squarely on the shoulders of the assessee.
14. The legal aspect of the matter having now been resolved by the Full Bench of this court in the case of CIT v. Nathulal Agarwala & Sons [1985] 153 ITR 292, there remains no doubt for a minute that the Tribunal committed a serious error of law in placing reliance upon the ratio decided in the case of Shanker Lal Kejriwal v. CIT [1964] 54 ITR 541 (Pat). The assessment year in question being subsequent to the amendment brought in Section 271(1)(c) on April 1, 1964, I hold the Tribunal wrongly placed the onus upon the Department. Having held as above, the answer to the question of law for our decision is in the negative and I hold that, in the facts and circumstances of the case, the Tribunal was not correct in law in holding that the provisions of Section 271(1)(c) of the Act were not attracted. Having held as such, I further hold that the penalty was wrongly deleted.
15. Hearing fee Rs. 250.
16. Let a copy of this order be transmitted to the Appellate Tribunal, Patna Bench, in terms of Section 260(1) of the Act.
Uday Stnha, J.
17. I agree.