HARIGOPAL SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question of law that arises in this appeal filed by the assessee under Section 260A of the Income-tax Act, 1961 (for short "the Act"), is whether penalty is attracted under Section 271(1)(c) of the Act where income is assessed purely on estimate basis and additions are made in the declared income on that basis. THE facts giving rise to this appeal lie in a narrow compass and these may first be noticed.

(2.) THE appellant is a Halwai (sweets seller) and he was not maintaining any accounts. He filed his income-tax return on estimate basis and declared his income at Rs. 52,000. THE income was, however, assessed by the Assessing Officer at Rs. 2,07,500 by estimating the appellant's sales and gross profit. THE appeal filed against the order of assessment was dismissed by the Commissioner of Income-tax (Appeals) with the following observations :

(3.) IN order to attract Clause (c) of Section 271(1) of the Act, it is necessary that there must be concealment by the assessee of the particulars of his income or if he furnishes inaccurate particulars of such income. What is to be seen is whether the assessee in the present case had concealed his income as held by the Assessing Officer and the Tribunal. He had not maintained any accounts and he filed his return of income on estimate basis. The Assessing Officer did not agree with the estimate of the assessee and brought his income to tax by increasing it to Rs. 2,07,500. This, too, was on estimate basis. The Tribunal agreed that the income of the assessee had to be assessed on an estimate of the turnover but was of the view that the estimate as made by the Assessing Officer was highly excessive and it fixed the total income of the assessee at Rs. 1,50,000 for the year under appeal. It is, thus, clear that there was a difference of opinion as regards the estimate of the income of the assessee. Since the Assessing Officer and the Tribunal adopted different estimates in assessing the income of the assessee, it cannot be said that the assessee had "concealed the particulars of his income" so as to attract Clause (c) of Section 271(1) of the Act. There is not even an iota of evidence on the record to show that the income of the assessee during the year under appeal was more than the income returned by him. Additions in his income were made, as already observed, on estimate basis and that by itself does not lead to the conclusion that the assessee either concealed the particulars of his income or furnished inaccurate particulars of such income. There has to be a positive act of concealment on his part and the onus to prove this is on the Department. We are also of the considered view that the Tribunal grossly erred in law in relying on Explanation 1(B) to Section 271(1)(c) of the Act to raise a presumption against the assessee. The assessee had justified his estimate of income on the basis of household expenditure and other investments made during the relevant period. It is not the case of the Revenue that he had, in fact, incurred expenditure in excess of what he had stated. IN this view of the matter, it cannot be said that the explanation furnished by the assessee had not been substantiated or that he had failed to prove that such explanation was not bona fide.