COMMISSIONER OF INCOME TAX Vs. SHYAM BABU

JUDGEMENT

(1.) In this case a statement of case was called for by this Court under s. 256(2) of the IT Act, 1961 (in short the Act) on the following question of law :

(2.) This reference pertains to the asst. yr. 1975-76. The assessee had returned its income of Rs. 37,775. Pursuant to assessment, addition of Rs. 37,701 was made to the returned income by the ITO. But ultimately going up to Tribunal the additions were sustained only to the extent of Rs. 15,074 only. The additions comprised under two heads, namely, Rs. 3,000 being unexplained cash credits and Rs. 12,074 as income from other sources. Keeping in view the additions, the IAC levied 100% penalty being Rs. 12,074 under s. 271(1) (c) of the Act. But the said order of penalty was cancelled by the Tribunal by holding that in view of the law laid down by the Supreme Court in the case of CIT vs. Anwar Ali (1970) 76 ITR 696 (SC) since the Department had failed to prove that the assessee was guilty of concealment of any income, the same is not sustainable.

(3.) After hearing the learned counsel for the parties, we are clearly of the view that the Tribunal has gone wrong in placing reliance on the case of CIT vs. Anwar Ali (supra). It is so because, during the period under consideration that explanation to s. 271(1) (c) of the Act had come into operation and since in the present case the total income returned by the assessee was less than 80% of the total income as assessed, the onus was on the assessee to prove that the failure to file the correct income did not arise from any fraud or any gross or wilful neglect on his part.