COMMISSIONER OF INCOME TAX Vs. BANKIM CHANDRA DUTT

JUDGEMENT

(1.) This reference arises out of the assessment of Bankim Chandra Dutt, the assessee, in the assessment year 1961-62, the relevant accounting period being 1367 B.S. During the material period the assessee had constructed two floors of a house at Howrah and he contended that the cost of such construction being Rs. 18,000 had been met out of his savings of earlier years. This was not accepted by the ITO, who estimated such cost at Rs. 45,000 and added the same to the income of the assessee as income from undisclosed sources. On appeal, the AAC reduced the addition to Rs. 25,000. From the order of the AAC an appeal was preferred by the revenue and a cross-objection was filed by the assessee. The Tribunal modified the order of the AAC and revised the addition to a sum of only Rs. 10,000.

(2.) In the meantime, the ITO had initiated penalty proceedings and had referred the matter to the IAC on the 16th December, 1965. In the said proceedings the assessee, relying on the decision of this court in the case of Anwar Ali [1967] 65 ITR 95 (Cal), contended that the onus of proving his guilt lay upon the revenue and as such the onus had not been discharged and the proceeding must fail. The IAC noted that the assessee had filed his return on the 11th October, 1965, by which date the Explanation to Section 271 of the I.T. Act, 1961, had come into operation. The assessee had declared in his return an income of Rs. 7,059 which was ex facie less than 80% of the assessed income. Therefore, the IAC held that in view of the said Explanation the onus was on the assessee to prove that he did not conceal particulars of his income. The assessee not having produced any evidence to show what was the real cost of construction, it was inferred that he had concealed the real cost. It was held that the assessee was in any event guilty of gross and wilful negligence, if not fraud. The IAC accordingly imposed a penalty of Rs. 6,000.

(3.) Being aggrieved, the assessee preferred an appeal from the said order to the Income-tax Appellate Tribunal. The Tribunal found that the final addition of Rs. 10,000 to the income of the assessee sustained as income from undisclosed source could not be treated to be the concealed income of the assessee and the guilt of the assessee was not conclusively established and, thereby applying the decision of the Supreme Court in the case of Anwar Ali , the Tribunal held that no case was made out for imposition of penalty. Following the decision of the Kerala High Court in Hajee K. Assainar v. CIT [1971] 81 ITR 423, the Tribunal held that the Explanation to Section 271(1)(c) of the I.T. Act, 1961, which was promulgated in 1964 did not apply to the relevant assessment year 1961-62. The Tribunal accordingly allowed the assessee's appeal and cancelled the order imposing penalty.