9911796707
TMI Blog1995 (7) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... Share from the firm 22,305 Investment in money lending in S.Y. 2039 as per order u/s. 132(12) 1,06,584 . 1,28,889 Less : Deduction u/s. 80C 1,720 . 1,27,169 The total income of the assessee was, however, finally computed at Rs. 3,88,400 in the following manner: . Rs Assessed share income 60,087 Income from other sources on account of unexplained cash 61,072 Unexplained investment in acquisition of gold ornaments 92,902 Unexplained investment in silver 70,003 Unexplained investment in money lending 1,31,169 Interest income worked out by the assessee himself 26,159 4. In the course of assessment proceedings the Assessing Officer (AO) after having prima facie felt satisfied that the assessee had concealed the particulars of his income or had furnished inaccurate particulars of such income, initiated penalty proceedings under s. 271(1)(c) of the Act against the assessee. 5. After having given an opportunity of being heard, the AO held that the assessee had failed to disclose his full and true income with wilful intention to avoid the incidence of tax. He categorically held that since the assessee had not furnished the true and correct particulars of his incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of additions made to the returned income were not considered in right perspective and, therefore, the penalty levied on the basis of orders passed on the quantum side was not justified. Refering to the cases reported in CIT vs. Jewels Paradise 1975 CTR (Kar) 1 : (1975) 101 ITR 265 (Kar), Behari Lal Ram Charan vs. ITO (1981) 24 CTR (SC) 116 : (1981) 131 ITR 129 (SC), Mehta Parikh & Co. vs. CIT (1956) 30 ITR 181 (SC) and Pushkar Narain Saraf vs. CIT (1990) 86 CTR (All) 110 : (1990) 183 ITR 388 (All), it was further submitted that it is never safe to levy penalty in respect of an income which has been treated assessee's income by application of certain deeming provisions in the Act. It was stressed that the provisions of s. 132(4) had restricted applicability and the presumption raised therein should not be extended to the assessment proceedings. 9. The learned counsel vehemently urged that in the course of proceedings under s. 132(11) the assessee was given an assurance that no penal action shall be taken against him provided he declared some income and pays tax accordingly. It was submitted that relying upon such assurances given by the CIT in the course of proceedings under s. 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985) 151 ITR 189 (Mad) and Shri Loknath Chowdhury vs. CIT (1986) 50 CTR (Cal) 340 : (1985) 155 ITR 291 (Cal). 11. After having given our thoughtful consideration to the arguments advanced before us, we entertain no doubt at all that on appreciation of the material on record and considering the facts and circumstances of the case there is no escape from the conclusion that the assessee had concealed the particulars of his income relating to the cash found in his possession at the time of search. But penalty referable to the investments allegedly made by him in acquisition of gold and silver ornaments as also earning interest income on accrual basis is difficult to be sustained in the present case. 12. On a study of the material before us, we find that penalty referable to the following points has been levied upon the assessee: (1) Cash : In the course of search, cash amounting to Rs. 92,894 was found in possession of the assessee out of which a sum of Rs. 92,000 was seized. Out of the seized amount the unexplained portion of cash was finally assessed at Rs. 61,072 and penalty referable to this amount has been levied. It is gathered from the study of the material on record that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the theory advanced by the assessee went unrebutted and, therefore, the deposition made therein should be accepted. It was further submitted that the uncrossed testimony in an affidavit should not be lightly rejected. It was further submitted that the effect of the statement of the assessee recorded under s. 132(4) should not be unduly enlarged so as to demolish the theory advanced by him subsequently and which theory stood supported by the affidavits of other persons. 15. We have given due consideration to the arguments advanced by the learned counsel. The proposition of law as canvassed before us is certainly subject to the dispute but that is not the end of the matter in the present case. In the instant case, huge amount in cash was seized from the possession of the assessee and when at the time of search he was asked about his possession of cash in such huge quantity, the assessee came out with the statement that it was his money earned in business but not disclosed to the Department. That was the first version given by the assessee in regard to his possession of the cash in question. This was an instantaneous statement of a person who was found in possession of certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 cows and 3 buffalows at the time of search, it cannot be inferred that he was running a dairy business and that such dairy business was started with the paltry amount of Rs. 3,000 received by the assessee from his father-in-law through his brother-in-law. On the face of it such a theory does not inspire confidence and, therefore, the uncrossed testimony of four persons contained in their respective affidavits carries no weight. Such a theory stood contradicted by assessee's own statement recorded under s. 132(4) at the time of search. 17. To sum up, we are clearly of the opinion that the learned IT authorities have rightly concluded that the sum of Rs. 60,823 represented assessee's concealed income. We accordingly hold that penalty referable to Rs. 60,823 was imposable and has rightly been imposed upon the assessee under s. 271(1)(c) of the Act and the same is hereby confirmed. 18. (2) Silver And Gold Ornaments: As stated above, gold ornaments weighing 6719 gms. and silver ornaments and bullion weighing 65.855 kgs. were found in the possession of the assessee at the time of search. Of the gold ornaments found, addition in respect of 522.340 gms. was finally sustained. Similarl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in the case of CIT vs. Khoday Eswarsa & Sons, the Supreme Court laid down the law in the following terms: "Penalty proceedings being penal in character, the Department must establish that the receipt of the amount in dispute constitutes income of the assessee. Apart from the falsity of the explanation given by the assessee, the Department must have before it before levying penalty cogent material or evidence from which it could be inferred that the assessee has consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that the disputed amount is a revenue receipt." Judged in the light of the above observations, we are of the opinion that it would not be safe to sustain the penalty referable to the additions made on account of acquisition of silver and gold ornaments by the assessee. In other words penalty referable to the amounts of Rs. 92,902 + Rs. 17,003 shall stand cancelled. 19. (3) Interest income : Penalty referable to interest income of Rs. 26,159 was also levied and sustained. On a study of the material placed at pages 45, 46 and 120 of the paper book, we are satisfied that whereas the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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