B.N. Kirpal, J.
1. The Income-tax Appellate Tribunal has referred under section 256 of the Income-tax Act, 1961, the following questions of law in respect of the assessment years 1964-65 to 1967-68 :
'(1) Whether, on the facts and circumstances of the case, no penalty is impossible under section 271
(2) Whether, even after the declaration made under section 14 of the Voluntary Disclosure of Income and Wealth Ordinance, 1975, onus lay on the Department to prove that there was concealment of income
(3) Whether, on the facts and circumstances of the case, the assessed could be said to have discharged the onus which lay on it under the Explanationn to section 271 ?'
2. Briefly stated, the facts are that, in respect of the said assessment years, the assessments were completed by the Income-tax Officer. Subsequently, a raid was conducted on the premises of the assessed under section 132(1) of the Income-tax Act and certain documents were seized. Before any further proceedings could be taken pursuant to the said raid, the Voluntary Disclosure Act of 1976 was promulgated. Taking advantage of this Act, the assessed filed disclosure under section 14 disclosing concealed income of Rs. 50,000 in each of the said assessment years. The assessed, however, did not get immunity from imposition of penalty as contemplated by section 14 of the Act.
3. The procedure was that along with the disclosure a revised return had to be filed and it is in that revised return that additional income of Rs. 50,000 each of the assessment years was disclosed. The Income-tax Officer accepted the disclosure and, on March 27, 1976, passed assessment order for the respective years under section 143 and section 147 of the Income-tax Act, 1961.
4. Because the assess did not pay the requisite tax, he could not get the benefit of the immunity contemplate by section 14 from the levy of penalty and the Inspecting Assistant Commissioner then proceeded to take recourse to the provisions of section 271(1) (c) read with section 274 of the Income-tax Act. Notices were issued to show cause why penalty should not be imposed. In reply to the said notices, the assessed stated that full tax had been paid under the voluntary disclosure scheme and, thereforee, no penalty was leviable. This was found to be factually incorrect because full tax had not been paid and the Inspecting Assistant Commissioner levied penalties of Rs. 4,600, Rs. 6,083, Rs. 6,921 and Rs. 7,150 for the assessment years 1964-65 to 1967-68, respectively.
5. Appeals were filed by the assessed against imposition of the said penalties. The Commissioner of Income-tax (Appeals) canceled the imposition of penalties. The Department then filed a second appeal to the Income-tax Appellate Tribunal but, by a common order dated October 10, 1980, the said appeals were dismissed. It is thereafter that the aforesaid question of law were referred to this court.
6. It has been contended by learned counsel for the Department that the Income-tax Appellate Tribunal decided in favor of the assessed on the ground that the Department had not discharged the onus of proof. It may here be noticed that, in respect of the assessment years in question, the Tribunal had followed its earlier orders in respect of the assessment years 1968-69 to 1970-71 and 1972-73, wherein the cancellation of the penalties had been upheld. The reasoning which was adopted by the Tribunal while quashing the penalties was that the assessed had explained that it had disclosed additional income to buy peace and to get out of protracted litigation and not because it had concealed income to the extent declared. The Tribunal observed that 'in such an event, the burden will shift to the Revenue and the material on record does not suggest that this burden stands discharged.' It also observed that there was no unequivocal admission on the part of the assessed before the authorities below that the additional income disclosed represented its concealed income for each of the assessment years. Another factor which was taken into consideration by the Tribunal was that the assessed had made the disclosure before the Department had become aware of the fact of concealment of income.
7. During the relevant years in question, section 271 and the Explanationn thereto read as follows :
'271. Failure to furnish returns, comply with notices concealment of income, etc. - (1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person - ...
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income,
he may direct that such person shall pay be way of penalty, - ...
(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than 20 per cent. but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income.
Explanationn. - Where the total income returned by any person is less than 80 per cent. of the total income (hereinafter in this Explanationn referred to as the correct income) as assessed under section 143 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 willful neglect on his part be deemed to have concealed the particulars of his cone of furnished inaccurate particular of such income for the purposes of clause (c) of this sub-section.'
8. The said provision came up for consideration before the Supreme Court in the case of CIT v. Mussadilal Ram Bharose : [1987]165ITR14(SC) . It was held by the Supreme Court that, if the returned income is less than 80 per cent. of the assessed income, a presumption is raised against the assessed that he has concealed income but this presumption can be rebutted. The rebuttal mist be on materials relevant and cogent. In the present case, the Income-tax Appellate Tribunal did not even refer to the Explanationn to section 271. It is in the absence of this reference that the more, the other factors which were taken into consideration were not relevant to the issue.
9. The difference between the income assessed originally and the income returned was more than 20 per cent. The onus of proof, thereforee, was clearly on the assessed and the Tribunal, unfortunately, did not go into this aspect at all. It was for the assessed to prove that he was not guilty of fraud or gross or willful neglect. There is no finding of fact to this effect by the Tribunal. If this finding had been arrived at then, the same would have been binding on us but by wrongly casting the onus of proof on the Department, the Tribunal has erred in deciding in favor of the assessed.
10. The ratio of the decision of the Supreme court in Mussadilal's case : [1987]165ITR14(SC) is clearly applicable to the present case. We may here observe that the Supreme Court has reiterated its earlier view in CIT v. K. R. Sadayappan : [1990]185ITR49(SC) . The assessed was clearly not entitled to the benefit of section 14 of the disclosure scheme because he did not pay the tax as contemplate by the Voluntary Disclosure Act. The filling of a revised return disclosing Rs. 50,000 more than what was originally assessed, in each of the assessment years, was a clear admission of previous concealment of income which the assessed had returned originally. The Department could validly act on the basis of this admission and, thereforee, in the absence of any rebuttal, the Department need not have investigated the matter any further. The onus of proof, after declaration had been made under section 14, did not lie of the Department and in fact the declaration itself amounted to acceptance of concealment of income.
11. In the circumstances of this cases, we are also unable to come to the conclusion that the assessed has discharged the onus which lay on it under the Explanationn.
12. For the aforesaid reasons, the questions of law are, accordingly, answered in favor of the Revenue and against the assessed.
13. There will be no order as to costs.