TMI Blog1995 (10) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... I, New Delhi, filing the declaration on behalf of the assessee-company. It was explained to the ITO that an amount of Rs. 1,35,000 (all in notes of denominations of Rs. 100 each) had been paid on 15-11-1977 as advance to a cotton broker in Haryana viz., Sri Jagdish Khosla for the purchase of ginned cotton and that since the transaction could not be made, Sri Jagdish Khosla returned the money to the assessee on 20-1-1978 in high denomination notes of Rs. 1,000 each. It was furthermore stated that one Sri C.K Kejriwal, father of the abovementioned Sri Devpriya Kejriwal, had come over to Hyderabad. Cash of Rs. 60,000 had been handed over to him in the first week of November, 1977 and that another sum of Rs. 75,000 had also been sent through an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , since October 1977 and ultimately on 18-11-1977 had even issued a legal notice to the Andhra Pradesh Federation of Co-operative Spinning Mills Ltd., Hyderabad. Hence, the appellant's contention that in November 1977 it had sent cash for the purchase of ginned cotton from Punjab did not appear plausible. (7) Whereas the company is reported to have given the cash in 100 rupee notes only, there was no explanation for the company's acceptance of the cash back from Sri Jagadish Khosla on 20-1-1978 in the denomination of 1000 rupee notes, 4 days after the High Denomination Notes Ordinance was issued by the President of India on 16-1-1978. " After considering the above mentioned facts, the ITO came to the conclusion that the version put forw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en an explanation regarding the possession of 135 high-denomination notes. The CIT(A) also discussed about the appeal made by the assessee against refusal on the part of the RBI to exchange high-denomination notes (which had already ceased to remain legal tenders) into ordinary currency notes, to the Government of India. The CIT(A) found out that even the Additional Secretary to the Government of India (Ministry of Finance, Department of Economic Affairs, Banking Division) in her letter F.No. 5/3/80-BO. I dated 2-7-1980 had stated " The Reserve Bank of India examined the claim of the appellant but were not satisfied either with the source of the notes or the ownership of the notes. " The CIT(A) furthermore referred to the discussion mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted by the departmental authorities. He thus argued that penalty under section 271(1)(c) was, therefore, not leviable in the instant case. He also argued that when the high-denomination notes were found out by the department, they had become valueless and had been reduced to merely pieces of paper inasmuch as in accordance with the ordinance issued by the President, the high-denomination notes no longer remained to be accepted as legal tenders. He thus contended that in the circumstances, there is no scope for applicability of the provisions of section 69A and that the addition of the amount of Rs. 1,35,000 itself is not proper. As an alternative ground, the learned counsel for the assessee also contended that even if it be found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 231 (Mad.) (ii) Radha Rukmani Ammal v. CIT [1957] 31 ITR 704 (Mad.) (iii) R.B. Shreeram Durgaprasad Fatechand Narsinghdas (Export Firm) v. CIT [1987] 168 ITR 619 (Bom.) (iv) CIT v. Jeevan Lal Sah [1994] 205 ITR 244 (SC). In his attempt to refute the alternative contention raised by the learned counsel for the assessee about restricting the amount of penalty to the meagre amount of income finally assessed, the DR argued that the following decisions would show that the amount of penalty can never go below the minimum amount prescribed under the Act. (i) CIT v. Khubchand Meghraj [1973] 91 ITR 498 (MP) (ii) CIT v. A.K. Das [1970] 77 ITR 31 (Cal.) (iii) Jodha Mal Kuthiala (R.B) Sons v. CIT [1974] 93 ITR 318 (Punj. Har.) (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the departmental case that as per the assessee's own version, the assessee had given a sum of Rs. 1,35,000 to the broker in Haryana sometime in November 1977, the source of which was unexplained inasmuch as the transaction was outside the books of the assessee. Had the addition been made in that way, the departmental case might have some legs to stand. However, the addition has been made in the instant case in respect of the high-denomination notes which were tendered by the assessee to the RBI on 24-1-1978. It cannot be said that the assessee was the owner of any valuable article at that time. It is also not the version of the assessee that it was the owner of those high-denomination notes even prior to 16-1-1978 when those notes were a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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