AI Structured Summary
Not yet generated for this judgment
Judgment
Satish Chandra, C.J. - For the asst. yr. 1964-55 the ITO detected certain entries of investments made by the partners in the accounts books of the firm. The ITO added a sum of Rs. 56,000 as the firms income from undisclosed sources. This addition was confirmed in appeal. Subsequently, a penalty of Rs. 10,000 was imposed u/s 271(1)(c). This penalty was ultimately deleted by the Tribunal on the finding that "fraud is totally ruled out and so also there is nothing to show that the assessee was guilty of gross or wilful neglect in not returning the correct income as assessed". According to the Tribunal, the assessee had successfully discharged the onus cast upon it in view of the Explanation added to s. 271(1)(c) of the IT Act, 1961.
At the instance of the revenue, the Tribunal has referred the following question of law for our opinion :
"Whether, on the facts and in the circumstances of the case, the penalty of rupees ten thousand (Rs. 10,000) only is correct or maintainable in law under the provisions of s. 271(1)(c) as well as under Explanation to s. 271(1) ?"
Under the aforesaid Explanation, the burden lies on the assessee to show that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. The Tribunal has gone into the facts and has found that the assessee has successfully discharged the onus cast upon it and there is nothing to show that this was a case of gross or wilful neglect of not returning the correct income. The finding recorded by the Tribunal does not, in our view, suffer from any error of law. We, therefore, answer the question referred to us in the negative and in favour of the assessee and against the department.
There will be no order as to costs.
Suhas Chandra Sen, J. - I agree.