COMMISSIONER OF INCOME TAX Vs. BHERULAL SHRIKISHAN

JUDGEMENT

(1.) THIS is a reference under Section 256(2) of the I.T. Act, 1961. On the direction of this court the Income-tax Appellate Tribunal, Indore, has stated the case and referred the following question for our decision :

(2.) THE assessee is an HUF carrying on business in grain and cotton, etc. For assessment years 1966-67 and 1967-68, it filed a return disclosing an income of Rs. 2,600 on estimate basis. THE ITO issued a notice under Section 143(2) of the Act, with which the assessee failed to comply, and, therefore, best judgment assessments were completed for each of the two years under Section 144 of the I.T. Act. THE total income computed by the ITO for each year was Rs. 18,100. THE assessee appealed against the assessments and the AAC reduced the income to Rs. 11,700 and Rs. 15,100 respectively. THE ITO initiated penalty proceedings and as the minimum penalty imposable exceeded Rs. 1,000, he referred the matter to the IAC under the provisions of the Act as they stood at the relevant time. THE IAC invoked the Explanation to Section 271(1)(c) of the Act and levied penalties of Rs. 9,100 and Rs. 12,500 for the two assessment years in question.

(3.) IT may be noted that the Appellate Tribunal placed complete reliance on the decision of the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696. The decision was rendered under the 1922 Act which did not contain any provision analogous to the Explanation to Section 271(1)(c) of the Act which was introduced by the amendment of Section 271(1)(c) by the Finance Act, 1964, w.e.f. 1st April, 1964. We have reproduced the relevant portion of the Appellate Tribunal's order and it is clear from a mere perusal thereof that the Appellate Tribunal did not consider the question of burden proof in the wake of the Explanation to Section 271(1)(c) of the Act.