Commissioner of Income Tax vs S.I. Paripushpam

R. Jayasimha Babu, J.—The Tribunal held that levy of penally u/s 271(1)(c) of the Income Tax Act, 1961, was wholly unwarranted as there

had been no fraud and wilful neglect anil the assessce had, only with a view to co-operate with the Department, agreed to the addition of the sum

of Rs. 24,000 in the assessment of his income for the assessment year 1974-75. The assessing authorities had no material, apart from the fact that

the assessee had agreed to the addition of that sum to his income for the purpose of assessment, to hold that there had been any wilful neglect on

the part of the assessee in not having included such sum in his income earlier.

The Supreme Court in the case of Sir Shadi Lal Sugar and General Mills Ltd. and Another Vs. Commissioner of Income Tax, Delhi, pointed out

that every addition to the income of the assessee does not warrant such addition being treated as concealment of income. To quote the words of

the judgment (page 713) : ""There may be a hundred and one reasons for such admission, i.e., when the assessee realises the true position, it does

not dispute certain disallowances, but that does not absolve the Revenue from proving the mens rea of a quasi-criminal offence"". This court in the

case of Commissioner of Income Tax Vs. Inden Bislers, held that a finding of fraud is a serious matter in any context against any person and should

not be lightly recorded in the absence of proper evidence in support of that finding. The court further observed that the fact that the Explanation to

Section 271(1)(c) of the Act required the assessee to show that there was no fraud or wilful neglect does not any way enable the Revenue to

contend that there is a presumption of fraud or neglect without adducing any evidence, whatever to substantiate such assertion.

In this case, evidently there is no evidence at all on the basis of which the Revenue can contend that the assessee had fraudulently or wilfully or

negligently concealed the income. His agreement to the addition of the amount, by itself does not establish fraud or wilful neglect without something

more. The Tribunal has found that the Appellate Assistant Commissioner was right in holding that the amount, addition of which was agreed to by

the assessee, was an amount which had been set out in an enclosure filed along with the assessee''s return of income. There was, therefore, no

question regarding that amount which has been fraudulently concealed.

Having regard to the finding recorded by the Tribunal on the facts the conclusion reached by the Tribunal cannot be said to be erroneous.

The question referred to us regarding the correctness of the Tribunal''s order is, therefore, answered in favour of the assessee and against the

Revenue. The respondent shall be entitled to costs on the sum of Rs. 1,500.