TMI Blog1970 (9) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... there was a cash credit dated 5-2-1130 (M.E.) for Rs. 20,000 in the accounts maintained by the assessee in his head office, the source of which was not properly explained. This credit entry was sought to be explained by the assessee by stating that it represented cash received from his branch at Kottayam but the Income-tax Officer did not accept this, since it was found on verification of the accounts of the Kottayam branch that the cash balance available thereon on 5-2-1130 was only Rs. 6,866 and a debit entry had been made in the branch-accounts relating to the amount of Rs. 20,000 only on 6-2-1130. Hence the Income-tax Officer completed the assessment for 1956-57 treating the amount of Rs. 20,000 as income derived by the assessee from " other sources " during the accounting period. The assessee appealed to the Appellate Assistant Commissioner. One of the contentions raised by him in the appeal was that the amount in question could not, in any event, be treated as assessable income from other sources for the year 1956-57, since the date of the dash credit entry was 5-2-1130 (22-9-1954), which was outside the relevant accounting period, namely, the year ending March 31, 1956. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation put forward by the assessee had already been rejected by the assessing authority and the Appellate Assistant Commissioner in the course of the assessment proceedings and, relying solely on that fact, he held that there had been a deliberate concealment of income by the assessee in respect of the sum of Rs. 20,000 and levied a penalty of Rs. 13,437. The assessee took up the matter in appeal before the Income-tax Appellate Tribunal and contended that the facts and circumstances of the case did not warrant the imposition of a penalty. One of the points which the assessee had specifically raised before the Tribunal was that the circumstances that the explanation given by the assessee had not been accepted in assessment proceedings will not by itself justify the conclusion that there was concealment or furnishing of inaccurate particulars of income by the assessee. The Tribunal by its order---annexure " C "---dated September 13, 1966, confirmed the levy of penalty and dismissed the appeal. An application filed by the assessee before the Tribunal under section 256(1) of the Act requiring the Tribunal to draw up a statement of the case and refer the question of law to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t satisfactorily discharged this burden the assessee is to be deemed to have concealed the particulars of his income for the purposes of section 271(1)(c) of the Act. Neither the Inspecting Assistant Commissioner nor the Tribunal has relied on the provisions of the Explanation for finding the assessee guilty of concealment and the case has been dealt with by them on the basis that it is governed by the terms of the section as they stood prior to the amendments introduced by the Finance Act, 1964. In view of the contention now put forward by the counsel for the revenue, it is necessary to examine whether the Explanation introduced in section 271(1) of the Act by the Finance Act, 1964, will govern the present case. As has been already noticed the Explanation in question was introduced in section 271(1) of the Act by virtue of an amendment of that section effected by section 40 of the Finance Act, 1964. It is expressly stated in section 1(2) of the Finance Act, 1964, that sections 3 to 55 thereof shall be deemed to have come into force only on the 1st day of April, 1964. It is, therefore, clear that the intention of Parliament was that the amendments in question introduced by sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alteration has been effected in the structure and content of the offence. This amendment certainly does affect rights of parties and, in view of the express mention in section 1(2) of the Finance Act, 1964, that it will come into effect only on April 1, 1964, it cannot apply to concealments, etc., which took place prior to that date. The penalty proceedings in the present case relate to the assessment year 1956-57, and, hence, they are governed only by the provisions of section 271(1)(c) as they stood at the relevant time. Since we have held that the Explanation will apply only to cases governed by the amended provisions of clause (c) it must follow that the new rule of evidence introduced by the Explanation has no application to the present case. We are, therefore, left with the question whether the finding entered by the Tribunal can be sustained without the aid of the Explanation relied on by the counsel for the revenue. A perusal of the order of the Inspecting Assistant Commissioner-annexure " A "-shows that the only ground stated by him for holding that the assessee has been guilty of concealment of income with respect to the amount of Rs. 20,000 covered by the cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions enacted in section 68 of the Act that the Income-tax Officer while making assessment proceedings in respect of any assessment year is empowered to charge to income-tax any sum found credited in the books of an assessee maintained for the previous year about whose nature and source the assessee does not offer a satisfactory explanation. Section 68 has, however, no application to proceedings for the imposition of a penalty. Such proceedings being penal in character, the burden is on the department to establish that the assessee has committed the offence charged against him. Where action is initiated against an assessee under section 271(1)(c) of the Act (as it stood prior to the amendments introduced by the Finance Act, 1964), he can be found guilty only if there is evidence which can reasonably lead to the conclusion that he has consciously concealed the particulars of his income or deliberately furnished inaccurate particulars of such income. The department has, therefore, to establish that the amount in dispute constituted income derived by the assessee during the accounting period. If there is no evidence on the record except the explanation given by the assessee which has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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