V.K. Singhal, J. - (1.) IN pursuance of the order given by this court under Section 256(2) of the INcome-tax Act, 1961, the INcome-tax Appellate Tribunal, Jaipur Bench, Jaipur, has referred the following questions of law arising out of the order of the Tribunal dated April 14, 1976, for the assessment year 1966-67 : "1. Whether, on the facts and in the circumstances of the case, the INcome-tax Appellate Tribunal misdirected itself in computing the amount of concealed income at Rs. 5,000 as against Rs. 25,071 computed by the INspecting Assistant Commissioner and thus in reducing the penalty imposed under Section 271(1)(c) of the INcome-tax Act, 1961, to a sum of Rs. 7,500 ?
(2.) WHETHER the learned Income-tax Appellate Tribunal was correct in law in holding that the penalty should be imposed on the assessee by computing on the basis of the law as obtained on the date of the assessment order and not on the basis of the law as obtained on the date of furnishing of return, i.e., May 21, 1966 ?" 2. The brief facts of the case are that the assessee is a medical practitioner in the Government service. The return of income was filed on May 21, 1966, showing a total income as Rs. 21,736 which included Rs. 18,000 as income from private practice. The assessment was completed on June 17, 1968, and the income from private practice was increased from Rs. 18,000 to Rs. 25,000 on the ground that the assessee has not maintained any account with regard to his private practice. Subsequently, information came to the knowledge of the Income-tax Officer that the assessee has not disclosed his true income in respect of consultation fees received from the Central Government employees and accordingly proceedings under Section 147 were initiated. It was found that a sum of Rs. 60,571 has been received by the assessee as consultation and injection charges from the employees of the Posts and Telegraphs Department but the same had not been disclosed in the return submitted. The assessee admitted that he must not have received more than Rs. 40,000 from the employees of the Posts and Telegraphs Department and Rs. 2,000 to Rs. 3,000 from other Central Government employees. The Income-tax Officer estimated the income at a figure of Rs. 65,571 as receipts from the employees of the Posts and Telegraphs Department and other Central Government employees. A sum of Rs. 6,000 was allowed in respect of expenses. Against the above order, the matter was challenged before the Appellate Assistant Commissioner who has confirmed so far as gross receipts were concerned but allowed the deduction of Rs. 12,000 instead of Rs. 6,000 in respect of expenses. This order of assessment was confirmed by the Income-tax Appellate Tribunal. Penalty proceedings were initiated by the Inspecting Assistant Commissioner when the assessee was confronted with the two returns filed on May 21, 1966, and July 22, 1970, where the income of Rs. 18,000 and Rs. 25,000 have been shown as his correct income. The statements were recorded on July 27, 1970, wherein it was stated that the major part of the income has been received from the employees of the Posts and Telegraphs and Accountant-General's Office, Food Corporation, Income-tax, All-India Radio and Salt Commissioner's office and that he has kept a register which has since been lost. A letter was written by the Post-Master General, Jaipur, to the Superintendent of Police (S. P. E.) as under : "Sub : Ways to prevent abuse of medical reimbursement facilities granted to Government employees. The authorised medical attendants who have received consultation and injection fees of the total income above Rs. 1,000 from the Posts and Telegraphs employees from 1965-66 are detailed in annexure-'A'- Annexure-'A'- 1. A.K. Sharma Rs. 60,561." A true copy of the aforementioned letter was received by the Income-tax Department. When the matter with regard to quantum appeal was considered by the Tribunal, it was observed as under : "From his statement dated July 27, 1970, and also from the findings of the authorities below, it is clear that the assessee was having good income from private practice in the assessment year under consideration. Whatever information was gathered by the Income-tax Officer was brought to the notice of the assessee specifically. From the statement of the assessee it is clear that, before he verified the bills of the employees of the Posts and Telegraphs Department and other departments, he received the money from them. The Income-tax Department, in pursuance of the aforesaid letter, gathered information regarding the receipt from the Posts and Telegraphs Department, by the assessee in the assessment year under consideration. The details of the said information are on record. Before us, on behalf of the assessee, an argument was advanced that the assessee was not given opportunity to see the information which was collected by the Income-tax Department. The Income-tax Officer, in the assessment order, has clearly stated that the assessee was given full opportunity to meet the information which he gathered from the said department. The assessee never informed the Income-tax Officer that he would file correct information regarding his receipts from the said Department before him. Looking to the assessment order and the material on record, it could not be said that the assessee was able to show that the information collected by the Income-tax Department regarding receipts by the assessee in the year of account was an imaginary figure. As a matter of fact, the information gathered by the Income-tax Department could very easily be rebutted by the assessee by producing some official from the said Department before the income-tax authorities. This was not done by the assessee. The assessee only took the plea before the Income-tax Officer that the said amount was excessive." The Inspecting Assistant Commissioner came to the conclusion that the Posts and Telegraphs Department has written in their letter dated January 4, 1967, that the payment of Rs. 60,571 has been received by the assessee and it was relied upon by the Income-tax Appellate Tribunal as well. It was further mentioned that the assessee has not produced any record and, in accordance with his statement dated July 27, 1970, a register was kept by him in which the names of the patients were mentioned who have claimed reimbursement from the Government but the said register was not produced by the assessee for reasons best known to him. A sum of Rs. 25,071 was considered as the concealed income after taking into consideration the income from the Posts and" Telegraphs Department of Rs. 60,571 and income from other departments at Rs. 2,500 and allowing the expenditure at a figure of Rs. 20,000 (instead of Rs. 12,000 allowed by the Tribunal) and reducing the professional income declared as Rs. 18,000 by the assessee in the return.
(3.) THE Inspecting Assistant Commissioner has taken up the matter with the Posts and Telegraphs Department to obtain the details of the figure of Rs. 60,571 and it was informed that the said bills have been weeded out/destroyed. The assessee has challenged this matter before the Income-tax Appellate Tribunal and there it was submitted that the burden was on the Department to prove that the assessee has concealed the particulars of income and since the original bills which were the primary evidence were weeded out, it could not be said that the assessee has concealed the particulars of his income. It was also submitted that the law as on the date of filing of the original return is applicable in respect of an offence for concealment. The Income-tax Appellate Tribunal came to the conclusion that there is positive evidence with regard to the quantum of concealment to the extent of Rs. 5,000 and since the assessee has not accepted the income at a figure of Rs. 60,571 to have been received from the Posts and Telegraphs Department, the benefit of the doubt was given. The penalty was reduced to a figure of Rs. 7,500. The submission of learned counsel for the Revenue is that there was an amendment by Act 75 of 1964 in Section 271(1)(c) and an Explanation was inserted according to which, where the total income returned by any person is less than 80 per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under Section 143 or Section 144 or Section 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 Clause (c) of this sub-section. It has further been submitted that the finding which has been given in the assessment proceedings is a finding of fact which remains unchanged and simply because the original vouchers in respect of the receipt of income by the assessee were not produced by the Posts and Telegraphs Department in the penalty proceedings, an adverse inference could not be drawn. The Tribunal has completely ignored the effect of the Explanation and, therefore, the reduction of penalty is not justified. ;