VIMALCHAND BHIMSEN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BOTH these cases are disposed of by this common judgment. The assessee is a partnership firm carrying on business in the firm name "M/s. Vimalchand Bhimsen, Jabalpur". Its business is in purchase and sale of iron goods. For the assessment year 1961-62, ending on March 31, 1961, the Income-tax Officer estimated the sales at Rs. 2,50,000 and applied a gross profit rate of 9%. On this basis, the gross income was computed at Rs. 22,500, out of which a sum of Rs. 7,500 was allowed as expenditure. However, the Income-tax Officer also found that the assessee had introduced certain cash credits amounting to Rs. 2,62,688 in the form of telegraphic transfers, for which the assessee could not give any satisfactory explanation. The Income-tax Officer found that the assessee could not relate these T.Ts. to the sale proceeds of the goods and, therefore, after considering the earlier years remittances and the material present on record, he estimated that the maximum amount of Rs. 1,80,000 alone could be accepted as remittances made out of the sales. Consequently, the Income-tax Officer added the remaining amount of Rs. 82,688 to the assessee's total income as income from undisclosed sources. The assessee's first appeal to the Appellate Assistant Commissioner partly succeeded and the addition made by the Income-tax Officer of Rs. 82, 688 was reduced to Rs. 50,000. The assessee's further appeal to the Tribunal was also partly allowed and this figure was further reduced to Rs. 25,000. In this manner, the addition of Rs. 82,688 made by the Income-tax Officer was ultimately reduced to the amount of Rs. 25,000.

(2.) AS a result of the addition made by the Income-tax Officer, penalty proceedings were also commenced against the assessee under Section 271(1)(c) of the Income-tax Act by the Income-tax Officer and the matter was referred to the Inspecting ASsistant Commissioner who levied a penalty of Rs. 25,000. The assessee's appeal to the Tribunal has failed and the penalty imposed by the Inspecting ASsistant Commissioner has been maintained.

(3.) REGARDING the question referred for the decision in Misc. Civil Case No. 462 of 1981, it cannot be disputed that the Explanation to Section 271(1)(c) of the Income-tax Act is attracted to the present case, on account of the fact that the income returned by the assessee is less than 80% of the income assessed. This being so, the burden was on the assessee to rebut the presumption arising by virtue of the Explanation. The Tribunal has clearly held that no plausible explanation was given by the assessee in spite of sufficient opportunity given to the assessee for this purpose, with the result that the presumption arising by virtue of the Explanation has been unrebutted. This conclusion of the Tribunal, apart from being one of fact, is also borne out from the reasons given in support thereof. There is thus no basis to hold in favour of the assessee even in respect of the penalty matter.