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TMI Blog1989 (12) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... It was explained that it was a cash purchase made by Sh. Hans Raj, partner at Ahmedabad. The total debit to the purchase account on account of this purchase came to Rs. 28,061. The source for this amount was claimed to be the amount borrowed from one Sh. R.K. Mittal, a partner in another firm. The said Mittal was produced before the ITO and according to the Income-tax Officer, his examination revealed that the amount in question did not belong to Sh. Mittal but to the assessee-firm. On that view the amount of Rs. 29,061 was treated as assessee's income from other sources and was assessed to tax. The addition made on this account was confirmed in appeal by the CIT on the ground that there was no good reason as to why the partner of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed that the books of account of the said M/s A.L. Darvesh & Co. were produced before the ITO and remained in his custody for long and they were also produced before the CIT (Appeals). Since Sh. R.K. Mittal had pointed out the source of the money by adducing satisfactory evidence the onus that lie on the assessee was fully discharged and that the levy of penalty was improper. The Commissioner of Income-tax during the course of appellate proceedings required the ITO to verify from the assessment records whether the books of M/s. A.L. Darvesh & Co. were produced before him for his examination. The ITO reported in the negative. The ITO submitted that the evidence sought to be adduced by way of account books of M/s. A.L. Darvesh & Co. was a ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into by the CIT and a decision thereon should have been recorded only then the question as to whether there was any concealment of income should have been decided. The learned Departmental Representative pointed out that when the quantum of decision was confirmed by the CIT also on appeal, there was no question of any further evidence being produced or considered by the CIT in penalty proceedings and particularly when the evidence in question was not produced before the authorities below and a wrong statement was made before the CIT that the said evidence was produced, but CIT was justified in refusing to look into the evidence. But in our view the approach adopted by the learned CIT does not seem proper, justified and judicial. It is now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to take certain plea in the penalty proceedings and does not impose any ban to the effect that a plea would not be permitted to be raised in penalty proceedings unless it was raised in regular assessment proceedings. All that it says is that the merits of the new pleas have to be examined with reference to the evidence. The question that arose before the Delhi High Court in Narang & Co.'s case was when the assessee agreed for an addition of Rs. 20,000 by way of cash credits, whether a penalty could be imposed for concealment of income on the basis of that admission and whether it is open to him to explain the admission in penalty proceedings by offering a different explanation and whether the explanation so offered could be consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of income. The Law does not envisage levy of penalty under section 271(1)(c) by way of punishment for not producing evidence before the authorities below and producing it only for the first time before the appellate authorities because the levy of penalty is for proved concealment of income. There are no doubt rulings regulating the right of the assessee to produce additional evidence before first appellate authorities but they relate only to the right of the assessee to produce additional evidence. Nevertheless the right of the assessee is not entirely taken away and that evidence which he failed to produce before the authorities below could still be produced before the first appellate authority, subject to the satisfaction of the requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was refused on the ground that it was not produced before the ITO. This ground is not just and proper to reject the consideration of the evidence.
6. Having regard to these salutary principles of law, we think that the proper course of justice in this case would be to direct the CIT to look into the evidence that the assessee had sought to produce before her and then to arrive at a conclusion as to whether that evidence is genuine and whether on the basis of that evidence, the case of the assessee is established.
7. We, therefore, remit the case back to the file of the CIT to dispose of the appeal afresh in the light of the above directions. The appeal is allowed, for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X
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