Punjab-Haryana High Court
Commissioner Of Income-Tax vs Rohtak District Transport ... on 21 March, 1989
Equivalent citations: [1989]179ITR556(P&H)
JUDGMENT Gokal Chand Mital, J.
1. In spite of service, nobody has appeared on behalf of the assessee. Accordingly, we proceed to decide the reference ex parte.
2. In the assessment proceedings relating to the assessment year 1969-70, the Income-tax Officer found cash credits in the account books of the assessee from six persons to the tune of Rs. 17,200. The Income-tax Officer doubted the genuineness of the deposits and gave opportunity to the assessee to produce the creditors. None of the creditors appeared and Rs. 17,200 were added as income of the assessee from undisclosed sources. In the quantum proceedings, the addition became final.
3. Proceedings for levy of penalty were started under Section 271(1)(c) of the Income-tax Act, 1961 (hereinafter called "the Act"). In those proceedings, the stand of the assessee was that the deposits were genuine but no evidence was produced in support of that in spite of opportunity having been granted. The Income-tax Officer imposed penalty of Rs. 17,200 which was the minimum penalty leviable. On appeal, the Appellate Assistant Commissioner of Income-tax upheld the penalty after recording a finding that the assessee did not produce any evidence whatsoever in support of the genuineness of the disputed credits. On further appeal, the Income-tax Appellate Tribunal deleted the penalty on the reasoning that the onus to prove that the disputed amounts represented the taxable income of the assessee and that the assessee had concealed the same, was on the Department which the Department failed to discharge. It further held that merely rejecting the explanation of the assessee does not amount to proof of concealment of income by the assessee. At the instance of the Revenue, the Tribunal has referred the following question for opinion :
"Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in cancelling the penalty imposed under Section 271(1)(c)?"
4. The Tribunal relied upon CIT v. Anwar Ali [1970] 76 ITR 696 (SC) and CIT v. Khoday Eswarsa and Sons [ 1972] 83 ITR 369 (SC), in deciding the matter in favour of the assessee. Both the aforesaid decisions are not applicable as there has been drastic amendment in Section 271(1)(c) of the Act and by virtue of that amendment, if the returned income is less than 80% of the assessed income, the Explanation becomes applicable and following three presumptions have to be raised as held by a Full Bench of this court in Vishwakarma Industries v. CIT [1982] 135 ITR 652 (head-note) :
"(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 assessed income was due to fraud ; or
(iii) that the failure of the assessee to return the correct assessed income was due to gross or wilful neglect on his part."
5. In view of the above, it will have to be deemed that the assessed income is, in fact, the income of the assessee and that the failure of the assessee to return the correct assessed income was due to fraud or due to gross or wilful neglect on his part. The Full Bench decision in Vishwakarma's case [1982] 135 ITR 652 (P & H) [FB] has the approval of the Supreme Court in CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 and Chuharmal v. CIT [1988] 172 ITR 250.
6. Accordingly, we hold that the Tribunal was in error in placing the onus on the Department instead of raising the legal presumptions against the assessee, which he failed to rebut, and in cancelling the penalty.
7. In view of the above, the question is answered in favour of the Revenue, in the negative, with no order as to costs.