ivil Appeal No 1248 of 1978
From the Judgment and Order dated 931977 of the Madras High Court in TC Petition No 362 of 1975
BB Ahuja and Ms A Subhashini for the Appellant
ATM Sampath and PN Ramalingam for the Respondent
The Judgment of the Court was delivered by SABYASACHI MUKHARJI CJ
This is an appeal by special leave from the judgment and order of the Madras High Court dated 9th March 1977
The appeal involves the assessment of income tax under the Income Tax Act 1961 hereinafter referred to as the Act  for the assessment year 1966 67
The assessee is an individual who carried on business in distribution of films for the assessment year 1966 67
The assessee filed a return of income on 12th July 1968 declar ing No loss
Subsequently the assessee filed a revised return on 4th January 1969 declaring a net loss of Rs9490
The Income Tax Officer called for wealth state ments from the assessee The wealth statements did not reveal that the assessee had invested any amount in the plot of land in T Nagar
However a raid made in the premises of EV Saroja and KR Sadayappan revealed the information that the assessee along with Smt
PSS Ekammai Achi and ALN Perianna Chettiar had purchased a plot of land in T Nagar on 1341965 from Smt
KV Saroja
The plot was purchased in the name of the assessee s son Sri Ramakrish nan
In the assessment it was stated that the total consid eration was Rs80000 out of which Rs25000 was the payment in respect of the portion purchased in the name of Sri Ramakrishnan
The examination of all the materials including the document revealed that the total 258 consideration was Rs 140000
The on money payment made by the assessee on behalf of his son was Rs 18750 for which the assessee could not adduce evidence to prove the nature and source of investment
This sum of Rs 18750 was treated by the Income Tax Officer as the undisclosed income of the assessee and he initiated penalty proceedings under section 2711c of the Act for concealment of income and referred the case to the IAC for disposal as the minimum penalty leviable exceeded Rs 1000
The IAC imposed a penalty of Rs 18750 being equal to the income concealed holding that the assessee had not discharged the burden cast upon him by the Explanation to section 2711c of the Act in not adducing any evidence that the plot was purchased by the assessee s son out of his own funds and against the asses see s own
statement recorded on 9101972 that the on money payment was made by him
The assessee filed an appeal to the Tribunal and contended that in case of rejection of asses see s explanation for the source the addition could not be held to be the concealed income of the assessee and relied on certain principles laid down by the courts
The Tribunal allowed the appeal
It is necessary to refer to relevant portions of the Tribunal s order in respect of which certain contentions were urged before us
The Tribunal in its order observed inter alia as follows We have considered the rival submissions
At first we were impressed by the argument of the Departmental Representative that it is a fit case for the levy of penalty
However when we find that the assessee had at no time given any false or different particulars about this property in his return of income or at any time during the assessment proceedings there cannot be any question of his having filed any incor rect particulars and more so of the income
The Departmental Representative was unable to point out any occasion when the assessee has stated before the Income Tax Officer during the assessment proceedings that he had purchased the property only for Rs80000
On the other hand when he was asked to state the consideration of the property during the examina tion he accepted that there were two agreements but the real consideration was Rs 140000
That being so we are unable to accept that the assessee had been wilfully negli gent or fraudulent in this regard
Then the question arises as to any concealment in the addition made by the Department as income from undisclosed sources
Here the assessee s case was that he had prepared a sort of cash statements to show that there 259 was some cash available for this purpose
The Department s case was that this was only a cash statement and this state ment sufferred from certain defects viz the absence of drawings for personal expenses and even the so called sur plus followed by utilisation for other expenses
No doubt the Income Tax Officer may be justified to say that not only the explanation is not convincing but false because there was no cash available to the assessee for payment towards the extra money paid
However rejection of explanation even on the ground of falsity will not mean that the addition represented the assessee s income and more so of the con cealed income of the assessee
In fact the assessee has not accepted the addition before the Income Tax Officer though he has not gone on appeal for reasons best known to him
Whatever it is there was no acceptance that the addition represented the concealed income
Having regard to all these we are of the view that the assessee s case falls within the ratio of the decisions in CIT vs Anwar Ali and CIT vs Khoday Ramarao  Sons In view of what we have expressed above we find no reasons to sustain the penalty
Accordingly we cancel the penalty
 The penalty was set aside
Aggrieved by the said order the revenue moved the Tribunal under section 2561 of the Act to refer the following questions of law to the High Court i Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in canceling the penalty levied us 271ic in the assessee s case ii Whether having regard to the provisions of Explanation to Section 27 11c the Appellate Tribunal s cancellation of penalty is sustainable in law and on the materials on record iii Whether the Appellate Tribunal s view that the addi tion of Rs 18750 did not represent the concealed income of the assessee is based on valid and relevant consideration and is reasonable view to take on the facts of this case The Tribunal refused to refer the questions stated hereinbefore
The respondent moved the High Court us 2562 of the Act
The High 260 Court was of the opinion that no question of law arose and ob served inter alia as follows It appears that the consideration mentioned in the said deed was Rs80000
Finally as a result of a search con ducted in the premises of RV Saroja as well as the asses see himself certain documents were seized which showed that the actual consideration was Rs140000 and not Rs80000
In this regard it was explained that even if it was consid ered that the purchase consideration admitted by the asses see was not adequate surplus cash balance and the addition al payment if any should be deemed to have been come out of such surplus fund and not out of any undisclosed fund
The Income Tax Officer found himself unable to accept the said explanation for the reason that the statements of receipts and payment filed by the assessee only enabled him to reasonably connect some of the payments but the said statement could not serve the purpose of a regular cash book disclosing such cash balance under the assessee s personal expenses were not shown in the statement
If these were taken note of the surplus if any would be wiped off
In the end he came to the conclusion that the assessee had not accounted for the full consideration for the plot purchased by him in the name of his son and that the balance of the consideration should have been met out of income from undis closed sources According to the High Court no question of law arose
Aggrieved thereby the revenue moved this Court and obtained leave under Article 136 of the Constitution
The short point is In the facts and circumstances of this case and in the light of law as it stood at the relevant time has the assessee been able to discharge his onus to prove the question which arose in view of the Explanation intro duced by the Finance Act 1964 section 271 of the Act
The said Explanation provides as follows 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 assessed us 143 or 144 or section 147 reduced by the expenditure in curred bona fide by him for the purpose of making or 261 earning any income included in the total income but which has been disallowed as a deduction such person shaH unless he proves 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 partic ulars of his income or furnished inaccurate particulars of such income for the purposes of cl
c of this subsection 
 It was explained by this Court in CIT vs Mussadilal Ram Bharose that under the law as it stood prior to the amendment of 1964 the onus was on the revenue to prove that the assessee had furnished inaccurate particulars or had concealed the income
Mr Ahuja appearing for the revenue urged before us that difficulties were found in proving the positive element required for concealment under the law prior to the amendment and this had to be estab lished by the revenue
He drew our attention to the observa tion of this Court at p 20 of the report where this Court reiterated that the effect of the Explanation was that where the total income returned by any person was less than 30 of the total income assessed the onus was on such person to prove that the failure to file 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 con cealed the particulars of his income or furnished inaccurate particulars for the purpose of section 2711 of the Act
The position therefore is that the moment the stipulated difference was there the onus to prove that it was not the failure of the assessee or fraud of the assessee or neglect of the assessee that caused the difference shifted to the assessee but it has to be borne in mind that though the onus shifted the onus that was shifted was rebuttable
This Court has explained the position at page 22 of the report as follows The position therefore in law is clear
If the returned income is less than 80 of the assessed income the presump tion is raised against the assessee that the assessee is guilty 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 materials relevant and cogent
It is for the fact finding body to judge the rele vancy and sufficiency of the materials 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
 262 Mr Ahuja and Mr Sampath both relied on this decision to contend what was the position in law
Relying on this decision Mr Sampath appearing for the assessee sought to urge that in the instant case the Tribunal had found that there was explanation for the excess and that was the end of the matter
No question of law arose thereafter according to him
It is true that the presumption that arose was rebuttable presumption that there was concealment of income and if there was cogent material to rebut the evidence that was acceptable then presumption would not stand
In the instant case the falsity of the explanation given by the assessee has been accepted by the Tribunal
The Tribunal stated that in the instant case no doubt the Income Tax Officer was justified to say that not only the explanation was not convincing but false because there was no cash available to the assessee for payment of the extra money paid
Therefore no explanation was forwarded as to where from the extra money came
If that was the position and the presumption was further that the assessee was guilty of fraud then the subsequent presumption followed that the assessee concealed the income and that can be only rebutted by cogent and reliable evidence
No such attempt in this case was made
In that view of the matter in our opinion it cannot be said that in this case the Tribunal was justi fied in rejecting the claim and penalty may be imposed
The presumption raised as aforesaid that is to say that the assessee was guilty of fraud or wilful neglect as a result of which the assessee has concealed the income would be there
This presumption could have been rebutted by cogent reliable and relevant materials
There was none at least neither the tribunal nor the High Court has indicated any
If that is the position the High Court in our opinion was in error in not correctly applying the principles laid down by this Court in CIT vs Mussadilal Ram Bharose supra and the principles of law applicable in a situation of this type to the facts of this case and therefore the decision is not sustainable
In the instant case there was no contro versy that the amount was not the income of the year in question
In the aforesaid view of the matter we set aside the judgment and order of the High Court and direct reference on the aforesaid question of law to the High Court
Let a statement of the case on the aforesaid question be forwarded by the Tribunal within four months from this date and the High Court dispose of the reference as quickly as possible
The appeal is allowed and is disposed of in those terms
The cost of this appeal will be the cost in the reference
PSS Appeal allowed


Summary:
The respondent s truck was seized by the police on 10th December 1974 for alleged contravention of the provisions of the on the night of 15th March 1972
The respondent fried applications before the High Court for quashing the orders of the Judicial Magis trate First Class and the Sessions Judge rejecting his request for the return of the vehicle on furnishing security and also for quashing the order of the Collector and re straining him from proceeding further in pursuance of notice issued by him under Section 6B of the Act for confiscation of the vehicle or directing the District Judicial Magistrate to dispose of his application in accordance with law
Allowing the applications and directing the return of the vehicle the High Court held that Section 6A of the Act as amended by Section 4 of the Amendment Act 1974 was only prospective and that the Criminal Court had jurisdiction to entertain applications under Section 523 read with 516A of the Criminal Procedure Code for the return of the vehicle seized by the police pending final decision of the criminal case
Dismissing the appeal by the State this Court HELD 11 The normal rule of construction is that a provision in a statute is prospective but not retrospective
However in the case of statutes which are merely declarato ry or which relate to only matters of 264 procedure or of evidence it may have retrospective effect if there are indications to that effect or the manifest purpose compels one to construe the Act as such
265G H 12 The High Court examined Section 4 of the Essential Commodities Amendment Act 1974 alongwith Section 6A of the Principal Act and came to the conclusion that there was no retrospective effect
Not only that there were no specif ic words to indicate the provisions of retrospective effect but the positive provisions of sub section 2 of Section 1 were to the effect that the amendment must he deemed to have come into effect on a particular date
The High Court was therefore right in holding that Section 4 of the Amendment Act 1974 was only prospective and not retrospective
266B C In the instant case the contravention of the provisions of the Act is alleged to have occured on 15th March 1972 whereas the vehicle was seized on th December 1974
There fore the provisions of Section 6A of the Essential Commodi ties Act 1955 as it stood on 15th March 1972 only were applicable to the present case and Section 4 of the Amend ment Act 1974 could not he applied as the Act was not in force on the date of offence
266D 2
Normally under the Criminal Procedure Code the Criminal Courts of the country have the jurisdiction and the ouster of the ordinary criminal court in respect of a crime can only he inferred if that is the irresistible conclusion flowing from necessary implication of the new Act
In view of the language used and in the context in which this lan guage has been used the High Court was right in coming to the conclusion that the Criminal Court retained jurisdiction and was not completely ousted of the jurisdiction
266H 267A B