S.L. Saraf, J. - (1.) AT the instance of the assessee, the Income-tax Appellate Tribunal has referred under Section 256(1) of the Income-tax Act, 1961, the following question of law for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961, in respect of both the years under reference ?"
(2.) THE facts of this case in a nutshell are that the assessee is an individual and was assessed for the assessment years 1971-72 and 1972-73. In the return for the assessment year 1971-72, the income from property was shown as Rs. 1,750 whereas income from the business was shown as Rs. 1,200. THE assessee was assessed on the income of Rs. 11,750 for that year. Similarly, for the assessment year 1972-73, the assessee filed its return showing the income from house property as well as business income as nil. For that year the assessee was assessed at the income of Rs. 11,750. THE difference in the business income disclosed by the assessee and determined by the Income-tax Officer was due to estimation of income from two trucks, namely, UPF-405 and UPF-444 plied during the relevant previous years. As regards truck No. UPF-405 ; the assessee's case was that the same belonged to his minor son, Vijay Kumar, and, therefore, the income from the said truck did not belong to him. As regards truck No. UPF-444, the assessee claimed that the said truck was exploited in partnership with two other persons. On the material gathered during the course of assessment proceedings, the Income-tax Officer came to the conclusion that truck No. UPF-405 was purchased by the assessee in the name of his minor son. As regards the other truck the Income-tax Officer found that the same was not exploited in partnership as alleged by the assessee. THE findings of the Income-tax Officer in respect of both the trucks were upheld by the Tribunal. During the course of assessment proceedings, the Income-tax Officer initiated proceedings under Section 274/271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and issued notices to the assessee to show cause as to why penalty should not be imposed on him under Section 271(1)(c) of the Act. In his letter dated March 19, 1976, the assessee requested the Income-tax Officer to drop the penalty proceedings in respect of the assessment year 1971-72 on the ground that the assessee had not concealed any fact or material and had disclosed all the facts at the time of assessment. The income from truck No. UPF-405 belonged to his minor son and, as such, the minor son had filed a separate return of income though the Income-tax Officer had clubbed the said income in the hands of the assessee. There was no mens rea on the part of the assessee. The Tribunal had reduced the amount of taxability of the assessee while confirming the order of the Income-tax Officer holding that no penalty could be imposed without establishing the mens rea. However, the Income-tax Officer was not satisfied with the reply of the assessee and confirmed the penalty imposed on the assessee. As against the said order an appeal was filed before the Appellate Assistant Commissioner who held that in the penalty proceedings the burden was on the Department to prove the fact and establish beyond reasonable doubt that the assessee had concealed the particulars of income. Merely because the assessment has been completed on a higher income which has been partly confirmed in appeal by the appellate authorities, the addition does not mean that the facts were completely proved because the assessment could be made for non-production of evidence which is entirely a different matter than penalty proceedings. The case of the Income-tax Officer is based on presumption. The Department had failed to prove that there was concealment on the part of the assessee, as such, the penalty proceedings could not be sustained and the penalty proceedings were cancelled. As against the said order, the Revenue went up in appeal before the Tribunal, who however without expressing any opinion as to whether there was any deliberate concealment on the part of the assessee to suppress or conceal any income, held that the provisions of the Explanation to Section 271(1)(c) of the Act would clearly be attracted in view of the decision reported in CIT v. Zeekoo Shoe Factory [1981] 127 ITR 837 ; [1978] UPTC 608.
(3.) WE have carefully considered the submissions put forward by learned counsel for the assessee and the Revenue. In order to appreciate the submissions of the parties, we set out the provisions of Section 271(1)(c) of the Income-tax Act, 1961, which reads as follows : "271. (1) If the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) in the course of any proceeding's under this Act, is satisfied that any person--. . . (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty--. . . (iii) in the cases referred to in Clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income : Provided that, if in a case falling under Clause (c), the amount of income (as determined by the Income-tax Officer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty-five thousand rupees, the Income-tax Officer shall not issue any direction for payment by way of penalty without the previous approval of the Inspecting Assistant Commissioner." A reading of this section makes it abundantly clear that the amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bona fide and all the facts relating to the same and material to the computation of his total income are disclosed, no penalty proceedings could be initiated.;