Punjab & Haryana H.C : Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in sustaining the penalty of Rs. 9,400 levied by the ITO under s. 271(1)(c) of the IT Act, 1961?

6th April, 1989 

Counsel Appeared

B.S. Gupta with Sanjay Bansal, for the Assessee : Ashok Bhan with Ajay Mittal, for the Revenue

GOKAL CHAND MITAL J.:

In the assessment proceedings, the assessee was finally assessed at Rs. 50,892 as against the returned income of Rs. 41,490 for the asst. yr. 1974-75. The returned income, was more than 80 per cent. of the assessed income and, therefore, the Expln. to s. 271 (1) (c) was not applicable and the burden of proof was on the Department to show, that penalty was leviable. However, all the authorities up to the Tribunal seem to have placed the burden on the assessee and came to the conclusion that since there is no satisfactory explanation furnished by the assessee, penalty was imposed on the concealed income of Rs. 9,400. On these facts, the Tribunal has referred the following question at the instance of the assessee for our opinion :

“Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in sustaining the penalty of Rs. 9,400 levied by the ITO under s. 271(1)(c) of the IT Act, 1961?”

It is beyond dispute that the Explanation is not applicable as the returned income was more that 80 per cent. of the assessed income and thus the burden of proof was on the Department but in this case, on a reading of the Tribunal’s order, it appears as though the burden of proof was on the assessee and since he failed to give any satisfactory explanation, the penalty was leviable. Since the Tribunal proceeded to consider the matter from a wrong view-point, it is a case which deserves to be sent back for fresh decision in accordance with law.

For the reasons recorded above, we are of the view that the Tribunal was not right in sustaining the penalty by wrongly placing the burden of proof on the assessee. Accordingly, the matter is sent back to the Tribunal to hear the appeal of the assessee afresh and take a fresh decision after placing the burden on the Department in accordance with law. The reference is answered in the aforesaid terms in favour of the assessee, leaving the parties to bear their own costs.

[Citation : 179 ITR 612]