TMI Blog2001 (10) TMI 1101X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 145 of the Act. The Assessing Officer initiated proceedings under section 271(1)(c) of the Act, accordingly. As no appeal was filed against such addition, the Assessing Officer issued a show-cause notice as to why the penalty under section 271(1)(c) may not be imposed. In reply, the assessee stated that the assessee was engaged in the cloth business. Various cloth dealers from the villages approach the assessee to purchase the drafts. They give the cash to the assessee, who purchases the draft in his name. The list of persons for whom the drafts were purchased, were also submitted before the Assessing Officer. All the six persons on behalf of whom, drafts have been purchased, were in the cloth business for so many years. Their addresses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed. The Commissioner of Income-tax (Appeals) also confirmed the penalty against which the assessee is in appeal before us. Learned counsel raised a preliminary objection to the effect that the notice under section 274 issued by the Assessing Officer did not mention as to whether the penalty being imposed for concealment of income or for furnishing inaccurate particulars of income. He stated that the penalty under section 271(1)(c) could be imposed for one of the offences and not for both. Reliance was placed on the decision reported in Smt. Ramilaben Ratilal Shah v. Asst. CIT [1998] 60 TTJ 171 (Ahd.). He also argued that in his order, the Assessing Officer has not invoked the explanation therefore was not justified in stating that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty has been imposed on the addition of Rs. 45,000 which represented peak investment in the purchase of bank drafts. He stated that during the course of assessment proceedings when the assessee was asked to explain the nature of these drafts, it furnished explanation before the Assessing Officer, which is placed at page 19 of the paper book. The assessee also furnished the list of the persons giving their addresses on behalf of whom the drafts were purchased. All the six persons on behalf of whom, the drafts were purchased were cloth dealers from outskirts area. All of them have confirmed that the assessee purchased the drafts on their behalf and they had supplied money for purchase of the drafts. They had also confirmed that they did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Mag 326 and the decision of the Amritsar Bench of the Tribunal in the case of CIT (Asst.) v. Vardhman Traders [1999] 106 Taxman 306 (Tax-Mag). Learned counsel, therefore, argued that the penalty sustained by the Commissioner of Income-tax (Appeals) was not justified and deserves to be cancelled. On the other hand, learned Departmental Representative stated that the assessee has failed to show as to why he was getting drafts prepared in his own name. If the funds were supplied by various customers, the drafts could have been purchased in the name of those respective parties. He also stated that it was for the drafts exceeding Rs. 50,000 that the bank account was needed. As none of the drafts exceeded Rs. 50,000, there was no requirement tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean that it was a fit case for penalty under section 271(1)(c) of the Act. Recently, the Supreme Court has taken the view that for invoking the Explanation to section 271(1)(c), it was not necessary that the same should be mentioned in the order. The Supreme Court has held that in imposing penalty, the Explanation has been automatically invoked. It appears that the Assessing Officer has invoked Explanation 1 to section 271(1)(c). This is evident from the fact that in his order, the Assessing Officer has mentioned that the assessee has failed to substantiate his explanation. But for imposing penalty under section 271(1)(c) it is not enough. Penalty can be imposed only if the assessee has failed to substantiate his explanation and has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Two main persons on whose behalf the drafts were purchased, were also produced before the Assessing Officer whose statements were also recorded. This has been also mentioned by the Assessing Officer as well as the Commissioner of Income-tax (Appeals) in their orders. We find that the Assessing Officer did not ask the assessee to produce the balance parties. We find that this is second year of operation and no such activity of this type was done in the earlier years. All these evidences go to show that the explanation furnished by the assessee was bona fide. Once the addition under section 69 of the Act, has been made by the Assessing Officer, the onus was on him to prove that it was undisclosed investment of the assessee. This was held so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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