CAPITAL CINEMA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE assessee was finally assessed at Rs. 1,55,492 against the returned income of Rs. 94,846. Since the returned income was less than 80 per cent. of the assessed income, in the penalty proceedings, the Explanation to Section 271 (l) (c) of the Income-tax Act, 1961 (for short "the Act"), became applicable and presumptions were raised against the assessee and since he was not able to furnish any explanation, penalty was imposed forthe assessment year 1972-73.

(2.) THE assessee got the following question referred for opinion :

(3.) THE question as posed shows the misunderstanding of the assessee about the legal position. The penalty provision is contained in Section 271 of the Act and on different counts, penalty of different amounts is imposable, wherever there is concealment of income. If the concealment is beyond 20 per cent. of the returned income, then the Explanation becomes applicable and presumptions have to be raised against the assessee which he can rebut but in case concealment does not exceed 20 per cent, the penalty is still leviable but, in this situation, the onus lies on the Department to prove concealment. Therefore, the Explanation has to be read with Section 271 (l) (c) of the Act and there is no question of considering the Explanation as separate or distinct from it. The law has to be applied to the given facts. Even if, in the order, a specific reference to the Explanation is not mentioned but the Explanation is applied and the onus is placed on the assessee because the returned income is less than 80 per cent. of the assessed income, from this an inference has to be drawn that the assessing authorities were conscious of the fact that the Explanation was applicable. We are not in agreement with counsel for the assessee that because mention of Explanation was not made in the order, that was not applied and the levy of penalty should be set aside. The matter of raising presumptions against the assessee on the given facts is covered by the following decisions of our court: