TMI Blog1958 (3) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1944, i.e., in S.Y. 2000. In the relevant account year S.Y. 2003, the assessee firm was constituted by two equal partners, they being Chimanlal Gokuldas and Rasiklal Manilal, the latter being the only son of Chimanlal's deceased brother, Manilal. Their shares were equal. 4. Up to and including S.Y. 2002, the said firm carried on business at Nadiad only. On October 25, 1946, it opened a branch in Bombay under the name and style of Bombay Metal Works. In the set of account books relating to the Bombay business, the following credits (rounded to the nearest rupee) appeared: Rasiklal Manilal ₹ 7,601 (Partner). Jaswantlal Chimanlal ₹ 2,534 Jayantilal Chimanlal ₹ 2,534 (Sons of the other partner, Chimanlal). Sundarlal Chimanlal ₹ 2,534 ₹ 15,203 The credits made their appearance on October 25, 1946, i.e., the first day of the account year S.Y. 2003. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he died. At one stage, Chimanlal had stated that the money was found in the house of his deceased brother, Manilal, after his second wife, Bai Ramakanta, ran away. Subsequently, he stated that it was the widow, Bai Ramakanta, and the boy, i.e., Rasiklal, who entrusted the amount to him in Kartik S. Y. 2003. According to Chimanlal, his brother had directed him to divide the amount equally between him and his brother's son, Rasiklal, but the money was not in his custody and was in the custody of Rasiklal, then aged 14. No explanation was given as to why the money was not divided immediately after the death of Manilal according to instructions, if they were given. Chimanlal further admitted that there was no evidence whatever to support the story of the sale of the ornaments by Manilal. 5. The said amount was added to the total income of the firm as income from undisclosed sources. That assessment had become final. In due course the Income-tax Officer completed the proceedings that he had initiated under section 28(1)(c) and imposed a penalty of ₹ 4,000. The material portion of section 28(1)(c) is as follows: 28. (1) If the Income-tax Officer............ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e testimony unless one has to hide the real state of affairs. I, therefore, hold that the provisions of section 28(1)(c) are attracted. He was also of the opinion that the quantum of the penalty levied did not call for any interference. 7. As there was a difference of opinion on a point, the members stated the point in the following words and referred the case to the President as required by section 5A(7) of the Act: Whether on the material on record, the assessee has committed an offence as described in section 28(1)(c)? The President of the Tribunal himself heard the point and he came to the conclusion that the explanation offered in regard to the source of ₹ 15,203, viz., that it represented the sale proceeds of the gold ornaments was not true . In regard to the question of the burden of proof, he also observed as follows: It is on the material that is on the record the Income-tax Officer has to determine whether the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of his income. Having so observed, he held as follows: On the material on the record, I have n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question set out in paragraph 8 is wide enough. Mr. Mehta, counsel for the assessee, suggested that copies of the assessment order, of the penalty order passed by the Income-tax Officer and of the explanation given by the assessee to the Income-tax Officer's notice under section 28(3), be annexed to the statement of the case. We do not find it necessary to do so as the statement of the case drawn has sufficiently brought out the issue about burden of proof under section 28(1)(c). G. N. Joshi, for the Commissioner. S. P. Metha with Mahendra Shah, for the assessee. JUDGMENT CHAGLA, C.J. It is difficult to understand why the Tribunal has made this reference. It appears that the assessee was assessed to tax on an income of ₹ 15,203 which the Department held to be income from undisclosed sources. A partnership was being carried on between two brothers Chimanlal and Manilal. Manilal died in S.Y. 2000. In the relevant account year S.Y. 2003 which corresponds to the assessment year 1948-49, the assessee firm was constituted by two partners, Chimanlal and Rasiklal, the son of Manilal. Up to S.Y. 2002, the firm carried on business at Nadiad only. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arises from the order of the Tribunal, and the question as framed is a question of fact and not a question of law. But, as the matter is of some importance and has been argued at some length, we will reframe the question so as to bring out the real controversy in regard to law between the Department and the assessee, and the question that we will reframe will be as follows: Whether there was evidence to justify the finding of the Tribunal that the assessee had not committed an offence as described in section 28(1)(c) in regard to its income of the previous year S.Y. 2003 relevant for the assessment year 1948-49. Now, the view taken by the dissenting member of the Tribunal and which view is also pressed upon us by Mr. Joshi is that inasmuch as the explanation given by the assessee is found to be false, that fact in itself is sufficient to entitle the Income-tax Officer to come to the conclusion that the assessee has committed the offence which calls for this penalty. Now, it is true that in the assessment proceedings, it is open to the Department to take the view that if a certain receipt appears in the books of account of the assessee, and the assessee is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the assessee is that the explanation he gave was a false one. As a matter of fact, the member of the Tribunal, who took the view in favour of the Department, puts it in this way: Where, however, the explanation given is so improbable that it amounts to being false then, I believe, the assessee exposes himself to the penalty leviable under section 28(1)(c). With respect to this member, he seems to overlook the fact, that we have already suggested, that the assessee is not being prosecuted for giving a false explanation. The charge against him is that he gave inaccurate particulars about his income, and it is not possible to infer from the falseness of the assessee's explanation that the receipt necessarily constitutes an income of the assessee. It is hardly necessary to emphasise that the assessee is not called upon to prove his innocence; it is for the Department to establish his guilt. If there was any evidence on which the Income-tax Officer had relied, then undoubtedly it was for him to be satisfied under the provisions of section 28(1)(c), but when there is no evidence the majority of the Tribunal was perfectly right in coming to the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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