R.N. Misra, J.
1. By order dated 27th September, 1973, this court directed the Income-tax Appellate Tribunal to state a case and refer the following question for adjudication :
'Whether, in the facts and circumstances of the case, and keeping in view the Explanation added to Section 271(1)(c) with effect from April 1, 1964, the levy of penalty was not in accordance with law ?'
2. These three applications relate to assessment years 1962-63, 1963-64 and 1964-65, respectively. The assessee maintained accounts on Dewali-year basis. Below are the particulars of returned income and finally assessed income of the assessee for the years in question.
Returned incomeAssessed income
3. In computing the income, the Income-tax Officer added cash credits ofRs. 84,000 and Rs. 20,000 in the assessment years 1962-63 and 1963-64,respectively. Corresponding disallowance of interest to the tune ofRs. 16,000 was added in the assessment year 1964-65.
4. The Inspecting Assistant Commissioner took note of the fact that the assessee had informed the Income-tax Officer to the following effect:
'The parties who had given us the loan are not now willing to give evidence in our favour. In this connection, we have no other alternative than to offer the sum to be added to our income and taxed in the relevant years,'
5. Accordingly, he proceeded on the footing that the loans were not genuine cash credits and in the absence of appropriate explanation, by his order dated 20th of September, 1968, passed in respect of each of these three years, imposed penalties under Section 271(1)(c) of the Act. Aggrieved by the imposition of such penalties, the assessee carried appeals to the Tribunal and the Appellate Tribunal held :
'It is explicit that the assessee was constrained to surrender the amount for want of evidence. It is now settled law that absence of evidence is not imperative for imposition of penalty. Nowhere the assessee pleaded or claimed ownership of the impugned cash credit as flown from own business or represented the concealed income of the respective years. A situation like the present one is understandable and at no stretch of imagination can it be said that the impugned cash credits were the concealed income of the assessee of the years. Surrender of the impugned amount is not conclusive evidence of concealment of the income. Even assuming that the Income-tax Officer, after exercise of diligence, discovered the impugned amount, the onus is on the department to prove by positive evidence that the impugned cash credits were the concealed income of the assessee. Not an iota of evidence has been placed on record by the revenue to justify the finding that the impugned amount was the concealed income of the assessee. It is one thing to make additions in the assessment for lack of evidence but to give a finding that the additions so made in the assessment were the concealed income is quite another. As the department has failed to prove the guilt of the assessee, we do not find any merit in the imposition of the penalty in the years under appeal......'
6. The Tribunal relied upon the decision of the Supreme Court in the case of Commissioner of Income-tax v. Anwar AH : 76ITR696(SC) ,
7. Section 271(1)(c) of the Act so far as relevant provides :
'(1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person......
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty....... Explanation.---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.'
8. There is no dispute before us that the Explanation applied to the facts of this case. The burden, therefore, lay on the assessee to establish that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on the part of the assessee. The position of law has been examined at length by this court in the case of Commissioner of Income-tax v. K.C. Behera : 103ITR479(Orissa) and has been followed in the case of Commissioner of Income-tax v. Laxmi Auto Stores : 106ITR626(Orissa) . The Appellate Tribunal clearly went wrong in proceeding to deal with the case by placing the burden on the revenue and its conclusion, therefore, has been totally vitiated. It overlooked the provisions in the Explanation referred to above.
9. Mr. Mohanty for the assessee contended that the notices in these years issued by the Inspecting Assistant Commissioner were misleading and, therefore, the assessee proceeded to lead no evidence. We are not in a position to say one way or the other with reference to such a submission because the notices are not before us and such a case has not been canvassed before the Appellate Tribunal. If the assessee rests on a contention of this type before the Appellate Tribunal after the matter goes before it, it is for the Tribunal to consider whether such a question does arise for consideration in accordance with law.
10. We would answer the question referred to us by holding that in the facts and circumstances of the case and keeping in view the Explanation added to Section 271(1)(c) of the Act with effect from April 1, 1964, the levy of penalty was in accordance with law. The judgments of this courtreferred to above were delivered after the Tribunal disposed of the appeals. Therefore, we direct the parties to bear their own costs.
B.K. Ray, J.
11. I agree.