TMI Blog1993 (3) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... rder under s. 132(5) of the IT Act, dt. 17th Nov., 1988, only Rs. 20,000 were considered to be assessee's undisclosed income. Thereafter on 12th Oct., 1990 a letter of enquiry was issued to the assessee alongwith notices under s. 148 for asst. yrs. 1983-84 to 1989-90. Referring to its copy on pp. 10-12 of his paper book, he pointed out that this letter enquired nothing about the assessment year under consideration, i.e., asst. yr. 1989-90. Specifically pointing out to the querry about Annx. A-10 sub-paras (i) to (iv) on page 11 of the paper book, he claimed that this would show that whereas the Assessing Officer required assessee's explanation regarding various papers in this Annexure 10, viz., pp. 3 to 7, 20 to 27 and 32, 33, etc., no question was raised about papers at S. Nos. 28 to 31. Thereafter, as may be seen from the chart of events, given on page 68 of his paper book, the assessee wrote a letter to the Assessing Officer, dt. 26th Nov., 1990 in which he surrendered various amounts of income for the asst. yrs. 1983-84 to 1988-89. On the same day he filed the return with computation of his income for the asst. yr. 1989-90 in which he included an amount of Rs. 35,000 as miscell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in his hands on 27th March, 1991 itself. Shri Vaish recalled that in the assessment order those papers have not been correlated with the assessee; in the letter of Assessing Officer dt. 12th Oct., 1990 there is nothing relevant to asst. yr. 1989-90; assessee's letter dt. 26th Nov., 1990 surrendering some income, has also nothing to do with the assessment year but earlier years. He repeated that even after surrender of Rs. 35,000 in this year, assessee's income was not taxable. He argued that the assessee had never owned those papers but had insisted that they were with him only in "Trustee capacity" and the assessee repeatedly said that it was not his income. Further, Shri Vaish urged, that only papers were found and no money was found. He further affirmed that no "scrutiny report prepared by the Department" as mentioned in the orders of authorities below, was supplied to the assessee. Referring to the photo copies of papers filed on pp 82-86 of the paper book he pointed out that they contained name of "Works of Art P. Ltd.". The Memo A-14 showed that it was cash book of Works of Art from 3rd May, 1988 to the date of search; that Rs. 47,100 were deposited on 24th June, 1988 in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concealed income and that there could be hundred and one reasons for assessee agreeing to the addition, but that could not absolve the Revenue from its obligation to prove that it was assessee's concealed income before penalty for concealment could be levied. According to Shri Vaish, this principle has been reiterated in the decisions in the cases of Director of Inspection vs. Pooranmal Sons Anr. 1974 CTR (SC) 243 : (1974) 96 ITR 390 (SC); C.P.A. Yoosuf vs. ITO (1970) 77 ITR 237 (Ker) confirmed in (1973) 90 ITR 501 (Ker) at CIT vs. Anwar Ali (1970) 76 ITR 696 (SC) and Wings Wear (P) Ltd. vs. ITO (1990) 33 ITD 41 (Del)(TM) at p. 50. He referred to the decision in the case of Prakash Trading Co. vs. ITO (1990) 33 ITD 131 (Del) where it was again emphasised that penalty proceedings were separate proceedings and the Department had to consider the evidence adduced in the penalty proceedings as well as the assessment proceedings as a whole and could not refuse to consider fresh evidence sought to be adduced during penalty proceedings. He referred to the decision CIT vs. Calcutta Credit Corpn. (1986) 56 CTR (Cal) 142 where it had been held that mere addition to the income did not au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Bench had concluded that mere fact that addition had been agreed to, could not by itself justify the imposition of penalty for concealment. He also referred to the decision in the case of Doon Valley Roller Flour Mills (P) Ltd. vs. IAC (1989) 31 ITD 238 (Del) in which case also during search some papers were found at the place of shareholder of the Company and the company had agreed to an addition against which no appeal was filed. It was held that agreement for addition was not sufficient for imposition of penalty. 6. In this background the learned counsel submitted that the basic principle which emerged was that for imposition of penalty, the Assessing Officer had to prove, and for that purpose put in fresh efforts, to the effect that the amount surrendered by the assessee was assessee's own income. He argued that if the assessee had not offered this amount or agreed to be assessed on this amount, the same should have been the result i.e. Assessing Officer might have made additions on the basis of those investigations. One possibility was that the ITO might not have succeeded in getting even the additions sustained if the assessee had gone in appeal and on the other hand if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer that no relaxation would be shown in matters of imposition of penalty or charging of interest. According to him, the surrender was the result of 2-3 events which were clear without deep examination and those events were search by the Department, investigation by the Assessing Officer and enquiries made from the assessee. 9. Regarding the argument of the learned counsel for the assessee in respect of application of Expln. to s. 271(1)(c), he referred to the decision in the case of Badri Prasad Om Prakash vs. CIT (1986) 54 CTR (Raj) 399 : (1987) 163 ITR 440 (Raj) where at page 446 the Hon'ble Court had held that Expln. to s. 271(1)(c) was not separate and was only part of that section. He submitted that in the instant case the assessee had filed an explanation which he could not substantiate, namely, that he was acting in the capacity of a trustee for Shri V.N. Ghiya and the other points mentioned in his explanation. According to Shri Kundra the assessee further failed to substantiate and prove that his explanation was bona fide and how those transactions were arrived at. He referred again to the case of Badri Pd. Om Prakash and a large number of other High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor even mentioned in assessee's reply nor in the penalty order and hence it could not be said that the purpose of surrender was merely to get imposed lower penalty. He reiterated that even an opportunity to explain those entries had not been given to the assessee during either the assessment proceedings or penalty proceedings. 12. We have carefully considered the facts and circumstances of the case and the detailed arguments and the case law advanced from both the sides. Since we have already mentioned in great detail the facts as well as the arguments from both the sides, it may not be necessary for us to repeat them. However, a reading (sic) of the preceding part of this order leads us to the conclusion that the arguments advanced by Shri Vaish have got lot of force both on basis of facts as well as on the basis of the case law on the subject. The facts and the material on record show that it is not even clear what actually those entries were on the basis of which the additions had been offered and made. Neither in the assessment order nor in the penalty order these entries have been reproduced to give an idea about their nature or as to whom they actually belonged. On the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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