Holding

The presumption under the Explanation to section 271(1)(c) is rebuttable; if the fact‑finding body, after considering relevant and cogent material, is satisfied that the assessee has discharged the onus and is not guilty of fraud or wilful neglect, the penalty cannot be imposed and no question of law arises.

Summary

The assessee, a liquor‑vendor firm, filed its return of income based on its own books, which the Income‑Tax Officer rejected and recomputed using an 8% net‑profit rate, resulting in a total income that was less than 80% of the correct income. A penalty under section 271(1)(c) of the Income‑Tax Act was levied, but the Tribunal cancelled it, holding that the assessee had honestly believed its books were sufficient and was not grossly negligent. The Revenue sought a reference under section 256(1) and (2), which were dismissed by the High Court on the ground that the Tribunal's finding was a factual one, not a legal question. The Supreme Court examined whether the presumption created by the Explanation to section 271(1)(c) is rebuttable and whether the onus shifted to the assessee can be discharged. It held that the presumption is indeed rebuttable and, if the fact‑finding body is satisfied on relevant material that the assessee is not guilty of fraud or wilful neglect, no penalty can be imposed and no question of law arises. Consequently, the appeal of the Revenue was dismissed.

Issues considered

Whether the Tribunal was justified in cancelling the penalty imposed under section 271(1)(c) when the returned income was less than 80% of the assessed income.
Whether the presumption under the Explanation to section 271(1)(c) is rebuttable and, if rebutted, eliminates the question of law.
Whether the onus of proof shifts to the assessee and can be discharged by satisfactory explanation.

Legislation cited

Income Tax Act, 1961s. 143, s. 144, s. 147, s. 256(1), s. 256(2), s. 271(1)(c), s. 274(2)

Subjects

Income TaxPenaltySection 271Concealment of incomePresumptionRebuttable presumptionOnus of proofGross negligenceWilful neglectAssessment

Judgment

COMMISSIONER OF INCOME TAX
v. A
MUSSADILAL RAM BHAROSE

"'' JANUARY 28, 1987.

[SABYASACHI MUKHARJI AND S. NATARAJAN, JJ.] B

Income Tax Act, 1961, s.271(1) (c)-Assessee-Concealment of
·particulars of his income or furnishing inaccurate particulars-Assessee
-; to prove that failure to file correct return of income did not arise from
\
fraud, gross or wilful neglect to the satisfaction of assessing authority.

-:t The Income-tax Officer rejected the account books of the res-
pondeet-assessee on the ground that the sales and expenses were not
c
verified and. the margin of profit shown was low. He adopted the net
profit rate at 8% thereby computing the profit at Rs.60,800 and the
" total income was computed at Rs.60936 after addition of Rs. !36 for
interest receipts. On appeal the Appellate Assistant Commissioner con- D
firmed this order of the Income-tax Officer. As the total income re-
turned was less than 80% of the correct income computed, he held that
the case fell within the ambit of s.271( 1) of the Act, and issued a show
cause notice under section 274 read with section 271 to the assessee. It
was contended on behalf of the assessee before the Appellate Assistant
Commissioner (i) that the assessee did not conceal the particulars of E
..t income nor furnish inaccurate particulars; (ii) that the income returned
was based on the books of account maintained in the regular course of
business; (iii) that the assessee could only declare the income as re-
fleeted in the books of account; (iv) that the difference between the
returned income and the assessed income did not arise from any frand
or gross or unlawful neglect on the part of the ;issessee; and (v) that it F
I' could not be considered in the circumstances that the assessee came
within the mischief of s.27 l{l)(c) of the Act. The Appellate Assistant
Commissioner rejected these contentions, confirmed the order of the
Income-tax Officer and in view of the Explanation to section 27 !( l)
levied a penalty of Rs.8,300 under section 271( l)(c) read with section
274(2) of the Act. G

The respondeet-assessee went up in appeal to the Tribunal which
cancelled the penalty order and finally determined the income of the
1 assessee at Rs.SO, 750 holding: (a) that the assessee had maintained
certain types of books of account and had honestly believed that the
same were sufficient for the true ascertainment of his profits and, from H

67
68 SUPREME COURT REPORTS [1987] 2 S.C.R.

A the facts he disclosed, it could not be said that he had been grossly or
wilfully negligent in filing the return of income and as such there was no
fraud; (b) that the difference between ·the income retnrned and the
income assessed arose mainly on account of excess profit, in view of the
various defects in the account books and the application of a higher
profit rate on. estimated turruover.
B
The application of the appellant-revenue seeking reference under
s.256( !) of the Act, was rej~ded by the Tribunal on the ground that no j-
question of law arose.

The apP,ellaet-revenDE: went before the High Court under section
C 256(2) of the Act seeking a reference on the question of cancelling the
penalty imposed under sec.27 t( l)(c) of the Act, and this application was
also dismissed on the ground that the finding of the Tribunal that the
assessee acted honestly nollwithstanding the defective nature of the
account books maintained by him was a finding of fact and therefore no
question of law arose.
0
Dismissing the appeal of the appellant-revenue, this Court,

HELD: 1. I If the Income tax Officer and the Appellate Assistant
Commissioner were satisfied that the assessee had concealed the parti-
culars of his income or furnished inaccurate particulars of such income,
E
he can direct that such person should pay by way of a penalty the
amount indicated in sub-clauise (ii) of clause (c) of section 27 1( I).

l.2 Under the law as it stood prior to the amendment of 1964, the
onns was on the revenne to 1~rove that the assessee had furnished inac-
F cnrate particulars or had coHicealed the income. Difficulties were found
to prove the positive elemeE1t required for concealment under the law
r·\I
prior to amendment. This positive element had to be established by the
revenue. To obviate that difficulty, the explanation was added. The
-effect of the Explanation is that where the total income returned by any
person is less th;m 80% of the total fncome assess_ed, the onus is on such
G person to prove that the failure to file the correct income does not arise
from any fraud or any gross or wilful neglect on his part and unless he
does so, he should be deemed lb have concealed the particulars of his
income or furnished inaccurate particulars, for tl.e purpose of section
271( 1). The position is that the moment the stipulated difference was
there, the onus that it was not the failure of tlte assessee or fraud of the
H assessee or neglect of the assessee that caused the difference shifted on
COMMR. OF INCOME TAX v. M.R. BHAROSE 69

the assessee but it has to be borne in mind that though the onus shifted, A
the onus that was shifted was re!>uttable.

!.3 If in an appropriate case the Tribunal or the fact finding body
was satisfied by the evidence .on the record and inference drawn from
the record that the assessee was not guilty of fraud or any gross or wilful
neglect and if the revenue had not adduced any further evidence tlten in B
such a case the assessee cannot come within the mischief of the section
-{ and suffer the imposition of penalty. That is the effect of the provision.

1.4 Presumptions raised by the Explanation to section 27 l( l)(c)
are rebuttable presumptions. The initial burden of discharging the onus
of rebuttal is on the assessee. Once that initial burden is discharged, the C
assessee would be out of the mischief unless further evidence was
'I
adduced.
i
1.5 If the returned income is less than 80% of the assessed in-
come, the presumption is raised against the assessee that the assessee is
guilty of wilful neglect or of fraud or gross or wilful neglect as a result of D
which he has concealed the income but this presumption can be rebut-
ted. The rebuttal must be on materials relevant and cogent. It is for the
fact-finding body to judge the relevancy and sufficiency of the mate-
.4 rials. If such a fact-finding body bearing the aforesaid principles in
mind comes to the conclusion that the assessee has discharged the onus,
it becomes a conclusion of fact. No question oflaw arises. E

In the instant case, the Tribunal has borne in mind the relevant
principles of law and has also judged the facts on record. It is not a case
' that there was no evidence or there was such evidence on which no
T reasonable man could have accepted the explanation of the assessee. In
1 that view of the matter the Tribunal rightly rejected the claim for F
reference under section 256( l) and the High Court correctly did not
entertain the application for reference under section 256(2) of the Act.

2. If a party comes within the mischief of the Explanation to
section 271 then there is a presumption against him and the onus to
discharge the presumption lies on the assessee but being a presumption G
it is a rebuttable one and if on appropriate materials, the Tribunal has
rebutted that presumption, no question of law can be said to arise.

CIVIL APPELLATE JURISDICTION: Civil Appeal NQ. 2083
of 1972.
H
70 SUPREME COURT REPORTS [1987] 2 S.C.R.

A From the Judgment and Order dated 24.9.1971 of the Allahabad \.-
High Court in Income Tax Appeal No. 535 of 1970.

S.C. Manchanda and Mrs. A Subhashini for the Appellant.

Ms. Rachna Gupta and S.K. Bagga for the Respondent.
B
The Judgment of the Court was delivered by '
SABYASA CHI MUKHARJI, J. This appeal arises out of the
'r
decision of the Allahabad High Court dated 24.9.1971. The High
Court by the order impugned dismissed an application under section
4-
1.-
c 256(2) of the Income-Tax Act, 1961 (hereinafter called the 'Act'). The
assessee, a firm of two partners was at the relevant time a licence
vender of country liquor. For the assessment year 1965-66, tlie Income 'y-
tax Officer rejected its account books on the ground that sales and
expenses were not verified and the margin of profit shown was low. It
may not be inappropriate in view of the contentions urged before us,
D to refer to the order of the Inspecting Assistant Commissioner for the
assessment year 1965-66 under section 271(1)(c) read with section
274(2) of the Act.

For the assessment year 1965-66, the Income Tax Officer, as ~--
noted by the Inspecting Assistant Commissioner, rejected the book
E result showing sales of country liquor at Rs.5,82,234 and the profit
margiri at 4% for lack of verifiability of sales and expenses and low
margin of profit. The Income Tax Officer estimated the sales at
Rs. 7 ,60,000 being Rs.6,50,000 in Lakhibagh shop and Rs. l, 10,000 in
Magra shop, and adopted the net profit rate at 8% thereby computing
the profit at Rs.60,800 and the total income was computed at
y,
I
F Rs.60,936 after addition of Rs.136 for interest receipts. On appeal, the
Appellate Assistant Commissioner confirmed the order of the Income-
Tax Officer. As the total income returned was less than 80% of the
correct income comp-uted, the case fell within the ambit of the Expla-
nation to section 271(1) of the Act.

G In pursuance to th1: notice under section 274 read with section
271 of the Act for default under section 271(1)(c) the assessee showed y-
cause. It was urged on !behalf of the assessee before the Inspecting
Assistant Commissioner that the returned income was based on the
books of accounts and excise registers maintained by the assessee firm
and the income was estimated. It was further urged that the failure to
H return the correct income if any, did not arise from any fraud or gross
COMMR. OF INCOME TAX v. M.R. BHAROSE [MUKHARJI, J.[ 71

or wilful neglect on the part of the assessee firm. The Inspecting A
Assistant Commissioner, however, held that by producing what the
Inspecting Assistant Commissioner termed to be defective account
books, it could not be said that the assessee had shown correct income.
The Inspecting Assistant Commissioner further noted that the sales
and expenses were unverifiable. The Inspecting Assistant Commis-
sioner was further of the opinion that the addition made by the B
Income-tax Officer was due to non-production of the material data
which the assessee firm ought to have produced for proper determina-
tion of its income. In arriving at the net profit@ 8%, the Income-tax
Officer had made the allowance for expenses and purchases at 92% of
the sales at Rs.7,60,000 i.e. at Rs.6,99,200 which covered all the ex-
penses and purchases found reasonable. The Inspecting Assistant C
Commissioner was, therefore, of the opinion that the assessee firm
was grossly negligent and had not discharged the onus of proving that
the said difference between the income returned and the correct in-
come did not arise from any gross or wilful neglect on the part of the
assessee and as such, in view of the Explanation to section 271(1), the
provisions of section 271(1)(c) were clearly attracted. On this basis the D
Inspecting Assistant Commissioner levied a penalty of Rs.8,300 under
section 271(1)(c) read with section 274(2) of the Act.

The assessee went up in appeal before the Tribunal. The
Tribunal noted the facts. It may be noted that subsequent to the order
of the Inspecting Assistant Commissioner, that is to say on 26th E
September, 1968, the quantum appeal was heard and partly allowed by
the Appellate Tribunal. By its order dated 26th September, 1968 the
Tribunal held that when viewed in the light of the licence fee paid by
the assessee, estimates of the turnover were on the high side. The
lower rates of profit were placed in cases of other liquor contractors
and that in the circumstances, the rate of net profit for both the shops F
should be 7% on estimated sales of Rs.6,25,000 for Lakhi Bagh shop
and of Rs.1,00,000 for the Magra shop. In view of this order, the
income finally determined for the assessment year was Rs.50, 750.

It is the case of the appellant that 80% of the income finally
assessed is Rs.40,600 which is much higher than the income returned at G
Rs.30,138. However, on behalf of the assessee, it was contended that
the assessee did not conceal the particulars of income nor furnish
inaccurate particulars thereof, that the income returned was based on
the books of account maintained in the regular course of business, that
the assessee could only declare the income as reflected in the books of
account, that the difference between the returned income and the H
72 SUPREME COURT REPORTS [1987] 2 S.C.R.

assessed income did not arise from any fraud or gross or wilful neglect
A
on the pari of the assessee and that it could not be considered in the
circumstances that the assessee came within the mischief of Explana-
tion to section 271( 1)( c) of the Act. •

After reviewing certain other cases, the Tribunal was of the view
B that like the cases referred to by the Tribunal's order, the assessee had
maintained certain types of books of account and it had appeared that
it had honestly believed that the same were sufficient for the true
,r-~

-
ascertainment of his profits and from the facts he disclosed it could not
be said that he had been grossly or wilfully negligent in filing such a ~-
return of income as he did and as such there was no fraud. In con-
formity with the other orders referred to by the Tribunal in the
c impugned order, it was held by the Tribunal that in the instant case,
the Inspecting Assistant Commissioner had erred in his finding and 'r
therefore, the penalty order was cancelled. From this decision of the
Tribunal under section 256(1), a reference was sought to the High
Court on the following question:
D
"Whether, on the facts and in the circumstances of the
case, the AppeUate Tribunal was justified in cancelling the
penalty imposed under section 271(1)(c)?" .
fl-. :;-
TI1e Tribunal found that it was clear from a perusal of the order
E passed by the Tribunal that it was not in doubt that the assessee
returned the income on the books of account maintained in the regular
course of business and that the difference between the income re-
turned and the income assessed arose mainly on account of excess
pr'i'fit, in view of the various defects in the account books and the ['
application of a higher net profit rate on estimated turnover. Follow- l
F ing the earlier orders of the Tribunal in similar cases, the Tribunal held
that if the assessee maintained certain types of books of account and
honestly believed the same to be sufficient for the true ascertainment
of his profits, it could be considered as making an estimate of income
on a proper basis and it could not be said that in filing the return of
income as reflected in the books of account, the assessee was grossly or
G wilfully negligent, much :less fraudulent. The penalty order was y-
vacated on this basis. The Tribunal was of the opinion that on this
finding no question of law arose and as such there was no scope for
reference of the said quction to the High Court. the application under
section 256(1) was, therefore, rejected.

H The revenue went up before the High Court under section 256(2)
COMMR. OF INCOME TAX v. M.R. BHAROSE [MUKHARJI, :I.] 73

of the Act seeking a reference on the question mentioned herein-
A'
before. The High Court by the judgment under appeal after referring
to the facts mentioned hereinbefore was of the view that no question of
law arose in this case. The High Court opined in the impugned judg-
ment that the finding of the Tribunal that the assessee acted honestly
notwithstanding the defective nature of the account books maintained
by him was a finding of fact. In the premises, the reference application B
was dismi~sed. As mentioned hereinbefore, this appeal arises from the
said decision of the High Court.

After amendment by the Finance Act, 1964, section 271 of the
Act along with the Explanation reads as follows:·

"271:-Failure to furnish returns, complying with notices,
c
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
D
0) ............................................... .
--~
(ii)

( c) has concealed the particulars of his income or furni-
shed inaccurate particulars of such income, he may direct E
that such person shall pay by way of penalty,-

F
(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% but shall not exceed one and a half times the amount
of tax, if any, which would have been avoided if the in-
come as returned by such person had been accepted as
correct income. G

Explanation: Where the total income returned by any
person is less than 80% of the total income (hereinafter in
this explanation referred to as the correct income) as as-
sessed under section 143 or section 144 or section 147
(reduced by the expenditure incurred bonafide by him for H
74 SUPREME COURT REPORTS [1987] 2 S.C.R.

the purpose of making or earning any income included in \-~
A
the total income, but which has been disallowed as a
deduction), such person shall, unless he proved 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 fur-
B nished inaccurate particulars of such income for the
purpose of clause (c) of this sub-section."
I

It is clear that if the Income Tax Officer and the Appellate Assistant
Commissioner were satisfied that the assessee had concealed the
particulars of his income or furnished inaccurate particulars of such
-t~
income, he can direct that such person should pay by a penalty the
c amount indicated in sub-c:lause (ii) of clause (c) of section 271(1) of the
Act. Before the amendment, difficulty arose and it is not necessary to y
trace the history, under the law as stood prior to the amendment of
1964, the onus was on the revenue to prove that the assessee had
furnished inaccurate par1iculars or had concealed the income. Diffi-
D culties were found to prove the positive element required for conceal-
ment under the law prior to amendment, this positive eleme1_1t had to
be established by the revenue. To obviate that difficulty the explana-
tion was added. The effect of the explanation was that where the total '
income returned by any person was less than 80% of the total income ~
assessed, the onus was on such person to prove that the failure to file
E the correct income did not arise from any fraud or any gross or wilful
neglect on his part and unless he did so, he should be deemed to have
concealed the particulars of his income or furnished inaccurate parti-
culars, for the purpose of section 271(1). The position is that the
moment the stipulated difference was there, the onus that it was not
the failure of the assessee' or fraud of the assessee or neglect of the
'r'
I
l
1
F assessee that caused the difference shifted on the assessee but it has to
be borne in mind that though the onus shifted, the onus that was
shifted was rebuttable. If in an appropriate case the Tribunal or the
fact finding body was satisfied by the evidence on the record and
inference drawn from the record that the assessee was not guilty of
fraud or any gorss or wilful neglect and if the revenue had not adduced
G any further evidence then in snch a case the assessee cannot come y--
within the. mischief of the section and suffer the imposition of penalty.
That is the effect of the provision. 1
Our attention was drawn to several decisions to which out of
I
I
deference, to Shri Manchanda who argued before us on behalf of the
fl revenue, we shall refer. Vishwakarma Industries v. Commissioner of
COMMR. OF INCOME TAX v. M.R. BHAROSE {MUKHARJI, J.] 75

Income-Tax, Amritsar-I, 135 I.T.R. 652 is a decision of the Full Bench
A
of the Punjab and Haryana High Court where Sandhawalia, C.J.
speaking for the Full Bench observed that the object and intent of the
legislature in omitting the word "deliberately" from clause (c) of sec-
tion 271(1) of the Income Taxi Act, 196(and adding an Explanation
thereto by the Finance Act, 1964, was to bring about a change in the
existing law regarding the levy of penalty so as to shift the burden of B
·-1. proof from the department on to the assessee in the class of cases
where the returned income of the assessee was less than 80% of the
assessed income. The learned Chief Justice noted that the significant
thing about the change made in clause (c) of section 271(1) was the
designed omission of the word "deliberately" therefrom, whereby the
requirement of a designed furnishing of inaccurate particulars of in- C
come was obliterated. According to the learned Chief Justice, the
'I language of the Explanation indicated that for the purposes of levying
\
penalty the legislature had made two clear-cut divisions. This had been
done by providing a strictly objective and an almost mathematical test.
According to the Chief Justice, the touchstone therefor was the in-
come returned by the assessee as against the income assessed by the D
department which was designated as "the correct income". The case
where the returned income was less than 80% of the assessed income
can be squarely placed into one category. Where, however, such a
.. ·>{
variation is below 20% that would fall into the other category. To the
first category, where there is a larger concealment of income, the
provisions of the Explanation become at once applicable with the Fe- E
sultan! attraction of the presumptions against such an assessce. Once
the Explanation is held to be applicable to the case of an assessee, it
straightaway raises three legal presumptions, viz.(i) that the amount of
the assessed income is the correct income and it is in fact the income of
the assessee himself; (ii) that the failure of the assessee to return !he
correct assessed 'income was due to fraud; or (iii) that the failure of the F
assessee to return the correct assessed income was due to gross or
wilful neglect on his part. But it must be emphasised that these are
presumptions and become rule of evidence but the presumptions
raised are not conclusive presumptions and are rebuttable.

We are of the opinion that the view of the Full Bench of the G
Punjab and Haryana High Court is a correct view when it states that it
only makes a presumption but the presumption is rebuttable one and if
the fact-finding body on relevant and cogent materials comes to the
conclusion that in spite of the presumption the assessee was not guilty,
such conclusion does not raise any question of law.
H
76 SUPREME COURT REPORTS [1987] 2 S.C.R.

A Our attention was drawn to the decision of the Division Bench of '
the Allahabad High Court in Addi. Commissioner of Income-Tax, '\
Lucknow v. Lakshmi Industries and Cold Storage Co. Ltd., 146 I.T.R.
492. There the High Court found that the assessee had not given any
explanation. So, on the facts found, the inference of the Tribunal that
the amounts had been added and the evidence had been found un-
B satisfactory was not conect. Penalty was exigible in that case and the
High Court found that the Tribunal was wrong in cancelling the
penalty.

c
As mentioned hereinbefore, it depends upon the facts and
circumstances of each case. If a party comes within the msichief of the
Explanation then there is a presumption against him and the onus to
__j-
· -
discharge the presumption lies on the assessee but being a presump-
tion it is a rebuttable one and if on appropriate materials, that pre-
sumption is found to be rebutted no question of law can be said to
arise.
D
The Full Bench of the Andhra Pradesh High Court in Commis-
sioner of Income-Tax v. H. Abdul Bakshi & Bros., 160 I.t.R. 94 again
reiterated that the presumption spelt out becomes a rule of evidence.
Presumptions raised by the Explanation to section 271(1)(c) are
rebuttable pesumptions. The initial burden of discharging the onus of
E rebuttal is on the assessee. Once that initial burden is discharged, the
· assessee would be out of the mischief unless further evidence was
adduced. Here there was none.

Similarly, the Full Bench of the Patna High Court in the case of
Commissioner of Income-Tax, Bihar v. Nathula/ Agarwala and Sons, Tl
p 153 I.T.R. 292 had occasion to consider this, The High Court reitern-
ted that the onus to discharge the presumption raised by the Explana-
tion was on the assessee and it was for him to prove that the difference
did not arise from any fraud or wilful neglect on his part. The court
should come to a clear conclusion whether the assessee had discharged
the onus or rebutted the presumptions against him. The Patna High
G Court emphasised that as to the nature of the explanation to be
rendered by the assessee, it was plain on principle that it was not the
law that the moment any fantastic or unacceptable explanation was
given, the burden placed upon him would be discharged and the pFe-
sumption rebutted. We agree. We further agree that it is not the law
that any and every explanlion by the assessee must be accepted . .It
H must be acceptable explanation, acceptable to a fact-finding body.
COMMR. OF INCOME TAX v. M.R. BHAROSE [MUKHARJI, J.] 77
'
~
iy· Mrs. Gupta, appearing for the assessee, drew our attention to
the observations of the Division Bench of the Gauhati High Court in
A
Commis,;ioner Income-.Tax, Assam, Nagaland, Mariipur & Tripura v.
Chhaganlal Shankarlal, 100 I.T.R. 464. Our attention was also drawn on
behalf of the assessee to the decision of the Division Bench of the Allaha-
bad High Court in Commissioner of Income-Tax v. Nadir Ali and Com-

-, pany 106 I.T.R. 151. There the court observed that under section 271(1)(c)
read with the Explanation, a penalty could be imposed if the income
returned was less than 80% if the assessee did not prove that the
disparity between the income assessed and the income returned by him
B

--r- was not due to gross neglect or fraud. The fact that the assessee was
not maintaining his books of account in a particular way did not show
that he was guilty of gross neglect. The Income-tax Act did not
prescribe the manner in which the account books should be main-
c
'I tained. When the assessee filed his return on the basis of accounts
' which were maintained in the regular course of business it could not be
said that he was guilty of gross negligence. It could not be expected
from the assessee to file a return showing a higher income than what
was worked out merely because the department had applied a higher D
rate of profit in the earlier years. It was held by the Allahabad High
Court that on the facts, the assessee had sufficiently discharged the
burden.

The position therefore in law is clear. If the returned income is
less than 80% of the assessed income the presumption is raised against E
the assessee that the assessee is guilty of wilful neglect or of fraud or
gross or wilful neglect as a result of which he has concealed the income
but this presumption can be rebutted. The rebuttal must be on mate-
rials relevant and cogent. It is for the fact-finding body to judge the
I relevancy .and sufficiency of the materials. If such a fact-finding body
~ bearing the aforesaid principles in mind comes to the conclusion that F
the assess.ee has discharged the pnus., it becomes a conclusion of fact.
No question of law arises. In this case the Tribunal has borne in mind
the relevant principles of law and has also judged the facts on record.
It is not a case that there was no evidence or there was such evidence
on which no reasonable man could have accepted the explanation of
the assessee. In that view of the matter, in our opinion, the Tribunal G
1 rightly rejected the claim for reference under section 256(1) and the
High Court correctly did not entertain the application for reference
i' under section 256(2) of the Act. The appeal, therefore, fails and is

·• accordingly dismissed with costs.

H
M.L.A. Appeal dismissed.