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Commissioner of Income-tax Vs. Bankim Chandra Dutt - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 398 of 1972
Judge
Reported in[1979]118ITR456(Cal)
ActsIncome Tax Act, 1961 - Section 271(1)
AppellantCommissioner of Income-tax
RespondentBankim Chandra Dutt
Appellant AdvocateAjit Sengupta, Adv.
Respondent AdvocateNone
Excerpt:
- .....applying the decision of the supreme court in the case of anwar ali : [1970]76itr696(sc) , the tribunal held that no case was made out for imposition of penalty. following the decision of the kerala high court in hajee k. assainar v. cit : [1971]81itr423(ker) , the tribunal held that the explanation to section 271(1)(c) of the i.t. act, 1961, which was promulgated in 1964 did not apply to the relevant assessment year 1961-62. the tribunal accordingly allowed the assessee's appeal and cancelled the order imposing penalty.4. on the application of the commissioner of income-tax, west bengal iii, calcutta, under section 256(1) of the i.t. act, 1961, the tribunal has drawn up a statement of case and has referred the following question of law for the opinion of this court :'whether, on the.....
Judgment:

Dipak Kumar Sen, J.

1. This reference arises out of the assessment of Bankim Chandra Dutt, the assessee, in the assessment year 1961-62, the relevant accounting period being 1367 B.S. During the material period the assessee had constructed two floors of a house at Howrah and he contended that the cost of such construction being Rs. 18,000 had been met out of his savings of earlier years. This was not accepted by the ITO, who estimated such cost at Rs. 45,000 and added the same to the income of the assessee as income from undisclosed sources. On appeal, the AAC reduced the addition to Rs. 25,000. From the order of the AAC an appeal was preferred by the revenue and a cross-objection was filed by the assessee. The Tribunal modified the order of the AAC and revised the addition to a sum of only Rs. 10,000.

2. In the meantime, the ITO had initiated penalty proceedings and had referred the matter to the IAC on the 16th December, 1965. In the said proceedings the assessee, relying on the decision of this court in the case of Anwar Ali : [1967]65ITR95(Cal) , contended that the onus of proving his guilt lay upon the revenue and as such the onus had not been discharged and the proceeding must fail. The IAC noted that the assessee had filed his return on the 11th October, 1965, by which date the Explanation to Section 271 of the I.T. Act, 1961, had come into operation. The assessee had declared in his return an income of Rs. 7,059 which was ex facie less than 80% of the assessed income. Therefore, the IAC held that in view of the saidExplanation the onus was on the assessee to prove that he did not conceal particulars of his income. The assessee not having produced any evidence to show what was the real cost of construction, it was inferred that he had concealed the real cost. It was held that the assessee was in any event guilty of gross and wilful negligence, if not fraud. The IAC accordingly imposed a penalty of Rs. 6,000.

3. Being aggrieved, the assessee preferred an appeal from the said order to the Income-tax Appellate Tribunal. The Tribunal found that the final addition of Rs. 10,000 to the income of the assessee sustained as income from undisclosed source could not be treated to be the concealed income of the assessee and the guilt of the assessee was not conclusively established and, thereby applying the decision of the Supreme Court in the case of Anwar Ali : [1970]76ITR696(SC) , the Tribunal held that no case was made out for imposition of penalty. Following the decision of the Kerala High Court in Hajee K. Assainar v. CIT : [1971]81ITR423(Ker) , the Tribunal held that the Explanation to Section 271(1)(c) of the I.T. Act, 1961, which was promulgated in 1964 did not apply to the relevant assessment year 1961-62. The Tribunal accordingly allowed the assessee's appeal and cancelled the order imposing penalty.

4. On the application of the Commissioner of Income-tax, West Bengal III, Calcutta, under Section 256(1) of the I.T. Act, 1961, the Tribunal has drawn up a statement of case and has referred the following question of law for the opinion of this court :

'Whether, on the facts and in the circumstances of this case, the Tribunal was right in holding that the Explanation to Section 271(1) was not applicable to the assessment year 1961-62 ?'

5. At the hearing no one appeared on behalf of the assessee. Mr. A.K. Sen Gupta, learned counsel for the revenue, drew our attention to a decision of this court in CIT v. Champlal Jain : [1978]112ITR809(Cal) , where a Division Bench considered a question involving the identical controversy before us and answered the same in favour of the revenue. The facts in that case were that the return was filed by the assessee on the 15th September, 1964, for the assessment year 1963-64, and the total income returned by the assessee was less than 80% of the total income on which he was finally assessed. In the penalty proceeding the IAC rejected the explanation of the assessee that the addition in the assessment was made merely on estimate and that the assessee did not conceal any income. He held that the assessee having failed to discharge the onus which lay upon him under the Explanation to Section 271(1)(c) of the Act a penalty was imposable. On appeal, the Tribunal allowed the assessee's appeal and cancelled the penalty. The question which was referred from the said order of the Tribunal was in substance whether in respect of the imposition of penaltyfor the assessment year 1965-64, the Explanation to Sub-section (1) of Section 271 of the I.T. Act, 1961, would be applicable. The court noted that the return was filed after the introduction of the said Explanation in the Act and held that the assessee by filing an incorrect return committed the offence mentioned in the Explanation. It was held that in the case of an offence of this nature the law applicable would be that as effective on the date of the act when the offence was committed. The court followed the earlier decisions of the Allahabad High Court in CIT v. Data Ram Satpal : [1975]99ITR507(All) , CIT v. S. Devendra Singh : [1977]108ITR314(All) and Addl. CIT v. Jiwan Lal Shah : [1977]109ITR474(All) .

6. It appears to us, by reason of the aforesaid judgment of this court, that the controversy in this reference is concluded. Accordingly, we answer the question in the negative, in favour of the revenue and dispose of the reference. There will be no order as to costs.

C.K. Banerji, J.

7. I agree.


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