Addl. Commissioner of Income Tax vs Lakshmi Industries and Cold Storage Co.

C.S.P. Singh, J.—The Income Tax Appellate Tribunal, Delhi Bench " B ", has referred the following question for our opinion :

" Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in cancelling the penalty ? "

The assessment year involved is 1965-66. In the quantum appeal the Tribunal had upheld an addition of Rs. 50,000 on account of a particular quantity of firewood not accounted for, and also an addition of Rs. 41,500 from other sources. The ITO had issued notice u/s 271(1)(c) and the matter was referred to the IAC as the penalty imposable exceeded Rs. 1,000. The IAC held that the assessee was guilty of concealment and imposed a penalty of Rs. 1,60,000. The assessee took the matter up in appeal before the Tribunal. The Tribunal decided both the quantum and appeal by a consolidated order. It held that the Explanation to Section 271(1)(c) applied, but on the view that, as the addition of Rs. 50,000 has been made on the basis of estimate, and so far as the addition of Rs. 41,500 was concerned that was made because the assessee''s evidence had been found unstisfactory, gave the benefit of doubt to the assessee. The grounds on which the Tribunal has set aside the penalty does not appear to be sound in view of the decision of this court in the case of Rukmani Bahu Vs. Addl. Commissioner of Income Tax, , for, in that case, it has been held that after the introduction of the Explanation to. 271(1)(c), in case where the returned income is less than eighty per cent. of the assessed income, the onus lies upon the assessee to prove that he was not guilty of fraud or gross and willful neglect in filing the return. This onus has to be discharged by leading relevant evidence or pointing out circumstances which may discharge the onus so created. After the introduction of the Explanation, no question of giving benefit of doubt to the assessee arises, as penalty can be knocked off only in case the Tribunal holds that the assessee has established that failure to return the correct income was not due to fraud or gross or willful neglect on his part. The Tribunal, therefore, erred in knocking off the penalty on the consideration adverted to earlier. So far as the quantum of penalty is concerned, as the Tribunal has not gone into that question we do not think it advisable to express any opinion on it. It will be for the Tribunal to go into this question when it disposes of the matter u/s 260(1) of the Act.

We, accordingly, answer the question in the negative, in favour of the department, and against the assessee. As none has appeared on behalf of the assessee there shall be no order as to costs.