- (1.) QUESTION was referred to this Court for opinion arising out of ITA No. 231/Asr/1977 -78 for the asst. yr. 1968 -69 : "Whether, on the facts and in the circumstances of the case and in view of the provisions contained in s. 271(1)(c) of the IT Act, 1961, and the Explanation thereto, the Tribunal was right in law in cancelling the penalty imposed on the assessee -
(2.) BRIEFLY , the facts are that the assessee left India in 1955 and was a British National living in England thereafter. For the assessment year in question, the assessee did not file return of income. When it came to the notice of the ITO that the assessee had made certain investments during the assessment year in question, the sources of which could not be besides amount lying in the bank, for which no satisfactory explanation was there. These additions were upheld by the found that the explanations furnished by the assessee to justify the investments made in the properties were not bona fide. Since the assessee had concealed particulars of his income, notice under s. 271(1)(c) of the Act was issued for levy of penalty. Finding the explanation given by the assessee to be totally unjustified, penalty of Rs. 32,680 was levied by
(3.) IN spite of the fact that the Tribunal in quantum proceedings had recorded a categoric finding to the effect that the investments made by the assessee not only remained unexplained but even the explanation furnished by the assessee was found to be false, upheld the additions. Whereas contrary to what was held in quantum proceedings by the Tribunal, by recording a contradictory finding that there was nothing with the Revenue to disprove the explanation furnished by the assessee that there were sufficient funds available with the assessee's father for investment, the Tribunal set aside the penalty. We have heard learned counsel for the parties and have gone through the record. he relevant provisions of s. 271(1)(c) of the Act, as it stood at the relevant time, are extracted below : 271. (1) If the AO or the CIT(A) in the course of any proceedings under this Act is satisfied that any person - - a) and (b) xxxxxx (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 - - (i) and (ii) xxxxxx (iii) In the case referred to in cl. (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 the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished. Explanation. - -Where the total income returned by any person is less than eighty per cent of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under s. 143 or s. 144 or s. 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of cl. (c) of this sub - section." ;