TMI Blog1998 (5) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... btained from them the copy of the assessee's accounts in their books. On making verification with the assessee's books the AO noticed that payments on various dates as appearing in the books of accounts of Saroj Sales Corporation did not appear in the assessee's books on those dates but on subsequent dates only. Further verification showed that the assessee had been making payments on several days when sufficient cash balance was not available in her business account. In the assessee's books of accounts the payments were noted on subsequent dates when adequate cash balance were available. The assessee was given a copy of the account furnished by the Saroj Sales Corpn. showing the actual dates of receipt of money from the assessee. The assessee's explanation was that she had with her cash of Rs. 85,000 belonging to her children and that whenever there was cash shortage, she used to make use of the above sum and later as and when sufficient cash balances were available in the business, the amount would be withdrawn. It was admitted that the claim regarding the availability of the cash of Rs. 85,000 could not be proved with any evidence. The AO did not accept the assessee's explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication of the concealed income in this case. Drawing our attention to the assessment order dt. 30th March, 1992, the Departmental Representative submitted that in the assessment order the AO had shown clearly how the assessee had made payments on various dates even though there was not enough cash in the business account. Shaji pointed out that payments had been made with cash available with her, but kept outside the accounts. It was submitted that that explanation was rejected by the AO as no person would keep money of the children outside the account, if the same was not unaccounted cash and money from a genuine source. Shaji stated that it was only after the AO had pointed out that peak remittance of Rs. 2,98,808 in respect of which the source was to be explained that the assessee came forward with the offer of the same amount as income for assessment purpose. The learned Departmental Representative wanted to emphasise the fact that there was in fact quantification of the unexplained payment by the AO and that was why the exact peak amount was offered by the assessee as her income for assessment purpose. Shaji pointed out that the CIT(A) was not correct in stating that the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. The learned representative submitted that the assessee could have furnished evidence to prove the source of the funds to explain the remittances but as there was an agreement regarding penalty, no appeal was filed against the addition and the assessee felt that there was no need to prove the source of the funds. He relied on the decision of the Supreme Court in the case of Sir Shadilal Sugar Mills Ors. vs. CIT (1987) 64 CTR (SC) 199 : (1987) 168 ITR 705 (SC) to submit that from the assessee agreeing for the addition it did not follow that the amount added was the concealed income. The learned representative also referred to the decision of the Kerala High Court in CIT vs. M. George Bros. (1987) 59 CTR (Ker) 298 : (1986) 160 ITR 511 (Ker) to point out that in this case also before the assessment was completed, the assessee had made a full disclosure of the income and it was only on the basis of the particulars furnished by the assessee that the assessment was made. It was contended that there was no conscious concealment on the part of the assessee to attract the penal provisions under s. 271(1)(c). The learned representative submitted that the cases relied on by the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve received by the parties. As explained in my detailed letter dt. 13th Dec., 1991, these payments had to be made to maintain good relation with principal customers. On these occasions there would be no cash balance and payments were effected from money at my hand. However the source of receipt of this money may not be readily available at my hand. Above all in order to purchase peace with the Department I agree that to the lump sum addition of Rs. 2,98,800. But addition is agreed on your assurance to the following." The assessee thus admitted that on those dates there was no cash balance and the payments were effected from the cash available with her, source of receipt of which was not readily available. The assessee's claim accepted by the CIT(A) was that it was an offer to purchase peace with the Department. The first appellate authority further held that one cannot say that the Department has come to a final conclusion that there was concealment. The Department has not quantified the concealment. Before considering the question whether the Department has quantified the amount, it is necessary to see how the assessee arrived at the sum of Rs. 2,98,800 to be offered as income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 2,98,800 outside the books of accounts. As a matter of fact the AO had called for the assessee's explanation regarding the source of the funds and the assessee had given the explanation that it was the cash belonging to the children and kept in trust by the assessee. The claim was that the assessee was keeping with her Rs. 85,000 which her children had received as gifts on different occasions like birthdays. When the assessee gave that explanation the AO issued summons under s. 131 to record her statements; but the assessee sought adjournment and avoided appearance and later on 2nd Jan., 1992, offered for assessment the same amount representing the peak payment as worked out by the AO. The circumstances clearly show that it was when the assessee realised that the AO had gathered sufficient evidence against her (through enquiries with Federal Bank and the trade parties) that the assessee made the offer of the income for assessment. 8. Apart from the assessee's claim that there was an understanding that no penalty would be levied under s. 271(1)(c) no material was brought in by the learned representative of the assessee to substantiate such a claim. Hence no credence can be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account only on later days when the cash balances were adequate to cover the payments. There was an attempt by the assessee to explain that the remittances had been made with the cash of Rs. 85,000 belonging to the children and received by them as gifts on their birthdays. Of course, there was no evidence to support such a claim. It was the peak amount representing the payments outside the books of account that was assessed as the income from other sources. On facts, it can be seen that the case decided by the Supreme Court is distinguishable. In this context, we may also refer to the decision in CIT vs. Lunidaram Tulsidas Punjabi (1993) 114 CTR (Bom) 344 : (1993) 204 ITR 674 (Bom) wherein the Bombay High Court held as under: "Under the law, as it stood prior to the incorporation of the Expln. to s. 271(1)(c) of the IT Act, 1961, the onus was on the Revenue to prove that the assessee had furnished inaccurate particulars or had concealed income. Difficulties were found in proving the positive element required for concealment under the law, which had to be established by the Revenue. It is with a view to obviate such difficulties that the Explanation was added w.e.f. 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case. In the case decided by the High Court after the ITO had issued summons to certain persons for examination, the assessee wrote to the ITO to drop the examination and admitting the discrepancy between the stock declared and the actual stock, filed a revised return of income. The Court held that the revised return was not a voluntary return and that the Tribunal was correct in not having taken the revised return into account. The imposition of penalty under s. 271(1)(c) was held to be valid. In the other case, CIT vs. Haji P. Mohammed relied on by the learned Departmental Representative, the Kerala High Court upheld the levy of penalty under s. 271(1)(c) on the view that the omission on the part of the assessee to maintain accounts could not be regarded in law as a ground for exonerating the liability of the assessee from culpability under s. 271(1)(c) where the question to be considered was whether the assessee had concealed the particulars of his income or furnished inaccurate particulars of such income. In that case, the Court observed: "The conclusion was inescapable in law that in consciously omitting to disclose in the original return the amounts received by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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