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Commissioner of Income-tax, Patiala-i Vs. Bharat Tubewell Stores. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Case No. 35 of 1973
Reported in[1975]100ITR678(P& H)
AppellantCommissioner of Income-tax, Patiala-i
RespondentBharat Tubewell Stores.
Excerpt:
.....upheld the add back, but deleted the penalty on the ground that 'the revenue had to establish not by mere falsity of the explanation of the assessee or no explanation on the part of the assessee that the subject-matter of assessment is the concealed income of the assessee and that the burden lies on the revenue to establish the charge of concealment and the absence of an explanation or the falsity of an explanation cannot be construed as establishment of concealment. 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..........to the explanation to section 271(1)(c) of the act, which is in the following terms :'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 skillful 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.....
Judgment:

This is an application under section 256 (2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), requiring the Tribunal to refer the following question of law for our opinion :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that penalty was not exigible and in deleting the same ?'

On facts, there is no dispute that there was concealment of part of the income within the meaning of section 271(1)(c) of the Act. The Inspecting Assistant Commissioner levied the penalty and he relied on the Explanation to section 271(1)(c) of the Act in the matter of onus. When the appeal was preferred to the Tribunal both against the add back of Rs. 20,000 as well as the matter of penalty, the Tribunal upheld the add back, but deleted the penalty on the ground that 'the revenue had to establish not by mere falsity of the explanation of the assessee or no explanation on the part of the assessee that the subject-matter of assessment is the concealed income of the assessee and that the burden lies on the revenue to establish the charge of concealment and the absence of an explanation or the falsity of an explanation cannot be construed as establishment of concealment. 'However, if a reference is made to the Explanation to section 271(1)(c) of the Act, which is in the following terms :

'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 skillful 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',

the position would be in the reverse. The matter resets on the determination of on whom the onus lies to prove that the concealment was deliberate or not, and the true effect of the Explanation to section 271(1) of the Act. In this situation, the question of law as framed by the department does arise and we direct the Tribunal to refer the same along with the statement of the case for the opinion of this court. The costs will abide the ultimate result.


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