TMI Blog1989 (7) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... all deal with at the end. 2. There was a raid in the assessee's premises on 8-8-1980. Consequent to this raid, a mass of material came into the possession of the Department. Based on the material found during the raid on 8-8-1980, the assessee was also examined on the same date regarding the sources of his income etc. Eventually with reference to the seized material which showed the availability of cash, certain assessments were made for the assessment years 1979-80, 1980-81 and 1981-82. For all the assessment years, the assessee did not file appeals but contested the additions by way of preferring revision petitions under section 264 before the Commissioner of Income-tax. For the assessment year 1979-80, the petition was disposed of by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts as on 1-4-1979 and he found that the investments in the two concerns mentioned as on 31-3-1980 came to Rs. 1 lakh. The assessee's explanation was that this amount was not earned in the period 1-4-1979 to 31-3-1980 but had been earned in earlier years. On a consideration of all the facts and the material found, the final conclusion arrived at by all authorities was that the amount of Rs. 1 lakh was assessable in the assessment year 1979-80 for which the accounting period is 1-4-1978 to 31-3-1979. In addition, towards estimated personal expenses an amount of Rs. 12,000 was added giving a total income assessed of Rs. 1,12,000. The question that arises is whether on the facts stated above, penalty is exigible or not. The penalty im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s executor. The history which does not stand contradicted by any other material brought on record would show that at least from 1973 to 1976, the assessee was only a salaried employee and from 1976 to 1979 he had no ostensible source of income. Therefore, there is no material to show that the assessee could have earned any income of Rs. 1 lakh in the period 1-4-1978 to 31-3-1979 which is the accounting period relevant to the assessment year 1979-80. As we have already stated, in this accounting period no credits were noticed. The credits were noticed only in the subsequent accounting period relevant to the assessment year 1980-81. Therefore, merely because an assessment was made for the assessment year 1979-80, there is no material to hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1,54,500. There were certain other drawings by the assessee not reflected in the balance-sheet. After giving set off of business expenditure, the Commissioner sustained an addition of Rs. 1,10,712. He also sustained an addition of Rs. 12,000 for estimated domestic expenses. The total income computed after the Commissioner's order was Rs. 8,20,210. 7. The plea of the learned counsel was that no penalty can be imposed in respect of these additions which were based on estimates. We have analysed earlier whether the assessee could have had funds prior to 1-4-1979 and we had come to the conclusion based on the sworn statements that there were no such funds. Admittedly in the accounting period 1-4-1979 to 31-3-1980, the assessee did business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeded on a similar basis as for the year 1980-81. He eventually arrived at a total income of Rs. 4,03,900. Out of this, Rs. 2,53,900 represented investments made by the assessee by way of loans, fixed deposits, advance for house purchase etc. In the absence of proper accounts for business, this amount clearly has to be taken as representing an estimate of real business income. There is a further addition of Rs. 1,50,000 which went to make the total of Rs. 4,03,900. As far as this item of Rs. 1,50,000 was concerned, when the assessee was examined on 8-8-1980, there was a slip of paper found wherein it was shown that an advance of Rs. 1,50,000 had been paid to one Saraswathi for purchase of the property belonging to her. The assessee clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the seller which would be indicative of the fact that an advance of Rs. 1,50,000 was received. The records do not show any such investigation having been made. In this state of evidence, when the assessee had flatly denied the payment and there being no material to suggest that the statement made is false or incorrect, we have to come to the conclusion that in respect of the amount of Rs. 1,50,000, no penalty is exigible under sec. 271(1)(c). Therefore, we direct that the penalty under sec. 271(1)(c) for this year would be imposed with reference to the difference between the income of Rs. 2,53,900 and the income returned computed in accordance with law and at the minimum leviable in accordance with law. 9. Coming to the penalty under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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