Patna High Court
Commissioner Of Income-Tax vs Central Kooridih Colliery Company on 25 July, 1980
Equivalent citations: [1985]153ITR311(PATNA)
JUDGMENT
1. This tax reference relates to the assessment year 1966-67, where this court directed the Income-tax Appellate Tribunal, B-Bench, Patna, to state a case and refer the following question of law for the opinion of the court :
"Whether, on the facts and in the circumstances of this case, the cancellation of the penalty of Rs. 27,700 (Rupees twenty-seven thousand seven hundred) was legal and proper ?"
2. For the assessment year 1966-67, the assessee, a limited company, filed a return showing a sum of Rs. 19,407 as the income, on which the tax assessable would be Rs. 2,406. The Inspecting Assistant Commissioner of Income-tax, Dhanbad, determined the income of the assessee at Rs. 1,60,420, on which a tax of Rs. 85,474 was assessed. The assessee went up in appeal before the AAC as well as before the Income-tax Appellate Tribunal and the Tribunal reduced the income to some extent. As the assessable income was more than twenty-five per cent. of the returned income of the assessee, penalty proceeding under Section 271(1)(c) of the I.T. Act was initiated by the IAC of Income-tax and a penalty of Rs. 27,700 was imposed upon the assessee by his order dated February 12, 1969. Against that order, the assessee filed an appeal before the Income-tax Appellate Tribunal and the Tribunal, by an order dated October 10, 1972, allowed the appeal and set aside the order imposing penalty. Thereafter, the present reference was called for at the instance of the Department.
3. Learned counsel appearing on behalf of the Department has stated that in view of the fact that the Explanation to Section 271(1)(c) of the Act was attracted, the Tribunal has erred in relying on the decisions reported in CIT v. Anwar Ali [1970] 76 ITR 696 (SC) and Hindustan Steel Ltd. v. State of Orissa [1972) 83 ITR 26 (SC), and holding that although the income assessed was well above 20 per cent. of the income returned, the onus lay on the Department to prove by cogent materials that the additions so made were concealed amounts of the assessee and they were in the nature of income. Learned counsel further submitted that the Tribunal was also wrong in holding that mens rea was required to be proved even in cases where the Explanation to Section 271(1)(c) was attracted, and that by mere production of the books, the assessee discharged the onus that lay on him under Section 271(1)(c) of the. Act and that the Department did not produce any evidence to show that the assessee concealed the amount and the concealed amount was in the nature of income.
4. The Explanation to Clause (c) of Sub-section (1) of Section 271 of the Act reads as follows :
"Where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under Section 143, or Section 144, or Section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of Clause (c) of this sub-section."
5. It has been held in the case of CIT v. Behera [1976] 103 ITR 479 (Orissa), that the onus in such circumstances vests on the assessee with effect from April 1, 1964, when the above-quoted Explanation was added, to prove that the failure to return the correct income did not arise from any fraud or gross or wilful neglect of the assesses, where the total income returned is less than 80 per cent. of the total income assessed. In the case of CIT v. Parmanand Advani [1979] 119 ITR 464 (Pat.), our own High Court also hold the same view. After the addition of the Explanation above-quoted, with effect from April 1, 1964, the position in this respect has changed and the decision in the cases of Anwar Ali [1970] 76 ITR 696 (SC) and Hindustan Steel Ltd. [1972] 83 MR 26 (SC), have no application. Therefore, the question is answered in favour of the Department and against the assessee. As there is no appearance on behalf of the assessee, there will be no order as to costs.