TMI Blog2010 (4) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... T The judgment of the court was delivered by 1. P. P. S. Janarthana Raja J.-The appellant has filed the above tax case appeals against the order of the Income-tax Appellate Tribunal, Chennai " A" Bench, dated June 17, 2004 in I. T. A. No. 286/Mds/2004 and 287/Mds/ 2004. 2. Both the tax case appeals related to the same assessee and they are also connected and hence, these appeals are disposed of by this common judgment. 3. When the above appeals came up for admission on October 11, 2004, this court admitted the same on the following substantial questions of law : T. C. (A) No. 824 of 2004 "1. Whether the Appellate Tribunal was right in law in sustaining the investment in the residential flat as unexplained, when the appellant had explained the nature and source of the investment and duly supported the explanation and discharged the onus cast on him under section 69 of the Income-tax Act, 1961 ? 2. Whether the Appellate Tribunal was right in law in upholding the addition of the amount being the appellant's son's earnings confirmed by him in a declaration before the Assessing Officer, as the appellant's income ? 3. Whether the Appellate Tribunal was right in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the assessment, the Assessing Officer made addition of Rs. 4,800 towards the income from house property and also Rs.11,31,510 towards unexplained investment under the head "Other sources"and also initiated penalty under section 271(1) (c). Aggrieved by that order, the assessee has filed an appeal before the Commissioner of Income-tax. The Commissioner of Income-tax sustained the addition to the extent of Rs. 2,64,068 out of Rs. 11,36,310. Aggrieved by that order, the assessee has filed further appeal before the Income-tax Appellate Tribunal. The Tribunal dismissed the same, confirming the order of the Commissioner of Income-tax (Appeals). Aggrieved by that order, the assessee filed the present tax case appeal. 6. The learned counsel appearing for the appellant/assessee submitted that the order of the Tribunal is wrong, illegal and without basis and justification. He further submitted that the Tribunal erred in confirming the addition of Rs. 2,64,068 as "unexplained investment". He further submitted that the Tribunal ought to have considered the explanation offered by the assessee that he had purchased a house out of his own savings, contribu- tion made by his son as well as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals), considering the facts and circumstances of the case and also taking into consideration the fact that the assessee was unable to produce the material evidence to explain the source of income for the purpose of investment, directed the Assessing Officer to send a report. The Assessing Officer also sent a detailed report regarding the same. After considering the same, the Commissioner of Income-tax (Appeals) granted substantial relief and only sustained the addition of Rs. 2,64,068 and the details regarding the same are as under : Rs. Maturity of fixed deposit 5,20,432 Loan from friends and relatives 1,57,000 Sale of jewellery 30,000 Total 7,07,432 11. Out of the value of the house of Rs. 9,71,500, the Commissioner of Income-tax (Appeals) accepted the explanation to the extent of Rs.7,07,432 and remaining sum of Rs. 2,64,068 alone was confirmed under the head " Income under other sources" . In respect of the said amount, the assessee gave explanation that he had saved a sum of Rs.57,600 out of his salary income, the savings of his son at Rs. 1,50,750 and also from sale of the wife' s jewellery a sum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee for the sources of the investments was found to be non-acceptable the only course open to the Income-tax Officer was to treat the value of the investments to be the income of the assessee. The submission is that the word 'may' in section 69 should be read as 'shall'. We are unable to agree. As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word 'shall' had been used but during the course of consideration of the Bill and on the recommendation of the Select Committee, the said word was substituted by the word 'may'. This clearly indicates that the intention of Parliament in enacting section 69 was to confer a discretion on the Income-tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the Income-tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered any explanation and was of the view that the assessee has concealed the particulars of income for the assessment year 1996-97 and therefore, the Assessing Officer levied minimum penalty. Aggrieved by that order, the appellant/ assessee has filed an appeal before the Commissioner of Income-tax (Appeals). The Commissioner (Appeals) confirmed the penalty imposed by the Assessing Officer but modified the quantum of penalty and in paragraph 2, it has been held as follows : "The addition towards unexplained investment has been sustained because the appellant could not furnish explanation for the investment as required under section 69. No further explanation has been adduced in the penalty proceedings. Therefore, penalty under section 271(1)(c) is leviable. The minimum penalty imposed by the Assessing Officer is confirmed with a direction to recompute the penalty amount after taking into account the relief given in the quantum appeal." 14. Aggrieved by that, the assessee has filed an appeal before the Appellate Tribunal. The Tribunal had dismissed the appeal and confirmed the order of the Commissioner of Income-tax (Appeals). Hence, the appellant/ assessee has filed the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accountant employed by him to represent his case could not be taken as reasonable cause for the failure on the part of the assessee to comply with the notices and concealing the particulars of income. Hence, we hold that the Assessing Officer is justified in levying the penalty and accordingly the same is confirmed." 20. From a reading of the above order, it is clear that the Tribunal has not given any independent findings and it has stated that the appellant/assessee has not responded to the notice issued by the Assessing Officer. Therefore, the assessee has no ground to seek deletion of penalty. The Tribunal is the highest fact finding authority and should have given independent findings and considered the relevant materials on record before confirming the order of the lower authorities. Here, in this case, addition was made under section 69 of the Income-tax Act. Section 69 is a deeming provision and the same cannot be extended to penalty proceedings. The Department cannot presume that there is a concealment. There must be independent finding. Further, the appellant had explained the source of income and therefore, it cannot be taken that there was concealment of income. Mere r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
