1998 Supreme(SC) 102

SUPREME COURT OF INDIA
B.N. KIRPAL AND S.P. KURDUKAR, JJ.
M/s. BA Balasubramaniam and Bros. Co., Appellant
Versus
Commissioner of Income-tax, Respondent.
Civil Appeals Nos. 1515-1517 of 1985, D/- 22-1-1998.

Under the Explanation to Section 271(1)(c) of the Income-tax Act, if the difference between assessed and returned income exceeds 20%, the onus of proof to avoid a penalty for concealed income rests with the assessee.

Headnote:(A) Income-tax Act - Section 271(1)(c) - Explanation - Penalty on concealed income - Onus of proof - Where the difference between the income assessed and the income returned is more than 20%, the Explanation to Section 271(1)(c) becomes applicable - It is for the assessee to discharge the onus of proof as contemplated by the said Explanation.

Facts of the case:
In the present case, the difference between the income assessed and the income returned was more than 20%. Consequently, the Income-tax Officer imposed a penalty on the concealed income. The High Court upheld this imposition, concluding that the assessee had failed to discharge the onus of proof required under the Explanation to Section 271(1)(c).

Findings of Court:
The court found that the High Court's judgment called for no interference because the assessee had not discharged the onus of proof as mandated by the Explanation to Section 271(1)(c).

Issues: Whether the Income-tax Officer was justified in imposing a penalty for concealed income based on the interpretation of the Explanation to Section 271(1)(c) and the failure of the assessee to discharge the burden of proof.

Ratio Decidendi: With the incorporation of the Explanation in Section 271, the previous legal position regarding the burden of proof no longer holds; the onus now rests on the assessee to discharge the proof as contemplated by the said Explanation.

Result: Appeals dismissed.