TMI Blog1980 (4) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... HAK. and N. L. UNTWALIA. JUDGMENT The judgment of the court was delivered by PATHAK J.--- This appeal, by special leave, is directed against the judgment of the Andhra Pradesh High Court, concerning the scope of s. 271(1)(c) of the I.T. Act, 1961. The assessee is an abkari contractor. It filed a return of its income for the assessment year 1959-60, disclosing a total turnover of Rs. 10,92,132 and an income of Rs. 7,704. The ITO did not accept the correctness of the return. He found that on 12th December, 1957, and 16th January, 1958, the excess of expenditure over the disclosed available cash was Rs. 17,720 and Rs. 65,066 respectively. He also noticed several deposits, totalling Rs. 28,200, entered in the names of certain Sendh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no positive material to establish that the cash deposits represented concealed income. In regard to the cash deficits, the Appellate Tribunal noticed that for the assessment year 1957-58 an addition of Rs. 2,00,000 had been made to the book profits, and it observed that some part of that amount could have been ploughed back into the business. It held that an amount of Rs. 90,000 representing unledgerised cash credits of that year could be said to have been introduced in this year. Allowing the appeal, the Appellate Tribunal set aside the penalty order made by the IAC. At the instance of the Commissioner, the following question was referred to the High Court : " Whether, on the facts and in the circumstances of the case, the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingredients before a penalty can be imposed. Since the burden of proof in a penalty proceeding varies from that involved in an assessment proceeding, a finding in an assessment proceeding that a particular receipt is income cannot automatically be adopted as a finding to that effect in the penalty proceeding. In the penalty proceeding the taxing authority is bound to consider the matter afresh on the material before it and, in the light of the burden to prove resting on the revenue, to ascertain whether a particular amount is a revenue receipt. No doubt, the fact that the assessment order contains a finding that the disputed amount represents income constitutes good evidence in the penalty proceeding but the finding in the assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much a part of his real income as that disclosed by his account books. It has the same concrete existence. It could be available to the assessee as the book profits could be. In Lagadapati Subba Ramaiah v. CIT [1956] 30 ITR 593, the Andhra Pradesh High Court adverted to this aspect of secret profits and their actual availability for application by the assessee. That view was affirmed by the Madras High Court in S. Kuppuswami Mudaliar v. CIT [1964] 51 ITR 757. There can be no escape from the proposition that the secret profits or undisclosed income of an assessee earned in an earlier assessment year may constitute a fund, even though concealed, from which the assessee may draw subsequently for meeting expenditure or introducing amounts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on all the circumstances pointing to that conclusion. What these several circumstances can be is difficult to enumerate and indeed, from the nature of the enquiry, it is almost impossible to do so. In the end, they must be such as can lead to the firm conclusion that the assessee has concealed the particulars of his income or has deliberately furnished inaccurate particulars. It is needless to reiterate that in a penalty proceeding the burden remains on the revenue of proving the existence of material leading to that conclusion. The Appellate Tribunal erred in law in confining itself to the fact that an intangible addition had been added to the assessee's book profits two years before and that a part of that amount remained available to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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