Commissioner of Income Tax vs C. Ananthan Chettiar

R. Jayasimha Babu, J.—The question referred for our consideration, at the instance of the Revenue is :

Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that no penalty should be levied with reference to

concealed income seized in the form of jewellery and cash following the ratio of the Supreme Court in the case of Sir Shadi Lal Sugar and General

Mills Ltd. and Another Vs. Commissioner of Income Tax, Delhi, , even after amendment to Section 271 in 1964 and in 1975?

The assessment year is 1986-87.

There was a search in the assessee''s shop and residence on 22nd Nov., 1985 at which time cash, jewellery and certain documents were seized.

Thereafter, a revised return was filed by the assessee for this assessment year, which return was accepted-and assessment made on the basis of

that return.

The assessee in response to the notice seeking to impose penalty, took the stand that there was no concealment and it was only for the purpose

of buying peace with the Department that the additional income was disclosed and the return filed. The Tribunal, relying on the decision of the

Supreme Court in the case of Sir Shadi Lal Sugar and General Mills Ltd. and Another Vs. Commissioner of Income Tax, Delhi, , held that no

penalty was in the circumstances leviable.

Learned counsel for the Revenue submitted that the order of the Tribunal is not in accordance with law, as it has ignored the Explanation to

Section 271(1)(c) of the Act. Learned counsel also placed reliance on the decision in the case of M/s. K.P. Madhusudhanan Vs. Commissioner of

Income Tax, Cochin, , wherein it was held that the law declared by the Court in the case of Sir Shadilal Sugar & General Mills Ltd. v. CIT,

(supra) was no longer applicable by reason of the addition of the Explanation to Section 271. That Explanation casts a burden on the assessee to

show that the additional income that had not been disclosed was not due to fraud or neglect.

In this case, the assessee offered no explanation at all except to assert that he disclosed the income only to buy peace with the Department and

what was disclosed, in fact, was additional income. The reason for not having disclosed the income earlier was not stated. In these circumstances'',

the Tribunal was in error in setting aside the penalty. The question is answered in favour of the Revenue and against the assessee, in the light, of the

latter decision of the three Judge Bench of the Supreme Court in the case of K.P. Madhusudhanan v. CIT (supra).