TMI Blog1962 (3) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,000 Rokar Panna 53 Ch. S. 7 Samwat 2002, i.e., 20-3-45, Nakad Byopari ka ... 5,000 8,000 8,000 The Income-tax Officer added a sum of ₹ 5,000 as income from undisclosed sources in the assessment for 1946-47. In so doing, he observed as under: The Amanat Khata shows a deposit of ₹ 3,000 on Pus S. 7 which was withdrawn on Magh B. 1. Then again a sum of ₹ 5,000 was deposited on Chait S. 7 and was withdrawn on Baisakh S. 9. The cash book shows that the cash was received from byopari but the name of byopari is not given. It has been contended by the assessee that ₹ 3,000 was deposited and then withdrawn and thereafter ₹ 5,000 was deposited. The sum of ₹ 3,000 is thus covered by the deposit of ₹ 3,000. However, considering the particular circumstances of the case, I add ₹ 5,000 for profit undisclosed. The assessment order for 1946-47 dated 28th October, 1949, is annexed as annexure A and forms part of the case. 3. On appeal before the Appellate Assistant Commissioner this additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposits from outsiders but the appellant's own money of the nature of business profits introduced into the books described as receipts from byoparies which were subsequently withdrawn after some time'. He rejected the contention of the assessee that the addition had been made on inference and that there was no positive evidence to show that the sum of ₹ 5,000 represented in fact an item of secreted profit and as such it was not a case for penalty under section 28. In the result he confirmed the penalty order of the Income-tax Officer. The order of the Appellate Assistant Commissioner dated February 8, 1952, is annexure C and forms part of the case. 5. There was a further appeal to the Tribunal. It concurred with the department that the assessee was deliberately concealing the source of this income and that the penalty was clearly attracted. The order of the Tribunal dated July 28, 1952, is annexure D and forms part of the case. 6. The question of law is: Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the department discharged its burden of proof in establishing that the sum of ₹ 5,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Amanat Khata shows a deposit of ₹ 3,000 on Pus S. 7 which was withdrawn on Magh B. 1. Then again a sum of ₹ 5,000 was deposited on Chait S. 7 and was withdrawn on Baisakh S. 9. The cash book shows that the cash was received from byopari but the name of byopari is not given. It has been contended by the assessee that ₹ 3,000 was deposited and then withdrawn and thereafter ₹ 5,000 was deposited. The sum of ₹ 3,000 is thus covered by the deposit of ₹ 5,000. However, considering the particular circumstances of the case, I add ₹ 5,000 for profit undisclosed. On appeal before the Appellate Assistant Commissioner, this addition was confirmed. He observed: For the profit of ₹ 5,000 the name of the depositor is not available in the account books nor any evidence has been given. I am, therefore, not prepared to interfere with the finding of the Income-tax Officer that the sum of ₹ 5,000 represents profits from some undisclosed sources. No further appeal to the Income-tax Appellate Tribunal appears to have been filed. It may be stated, as noted by the Appellate Assistant Commissioner, that no evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause why a penalty should not be imposed upon him under section 28(1)(c). In response to this notice the assessee furnished an explanation. The explanation was that due to lapse of four years time since the date of the deposit he could not remember the names of the byoparies from whom the temporary deposits were received. This explanation was rejected by the Income-tax Officer as fallacious . He observed: If the assessee wanted to disclose the source from which the money was received it could have been very easy for him to have noted down the names in his account books and the information could have been traced out after the lapse of any amount of time. The name, it appears, was not noted in the account books deliberately. The assessee is certainly not entitled to suppress full facts in his accounts and then try to take advantage of his own fault. In the circumstances he levy of penalty is not only fully justified but absolutely necessary. Thereafter the Income-tax Officer went on to consider the past record of the assessee and observed that: The past record of the assessee is anything but clean. It is a story of unreliable and rejected accounts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished before the Income-tax Officer or even at the appeal stage. It must therefore be said that these cash credits were not deposits from some outsiders, but were the appellant's own money, the nature and source of which was purposely not revealed before the department. In the circumstances it cannot be said that these additions were based on surmises or inference. From this it will appear that the Appellate Assistant Commissioner was impressed by the following facts: (1) The names of the depositors not having been given was a most unusual feature of the account books. (2) If the deposits were from genuine parties the names would have been given as it would not be possible to locate the depositors to whom the deposits were to be returned. (3) The names of the depositors were withheld in spite of specific opportunities and were not disclosed even at the appellate stage. The assessee went up in further appeal to the Income-tax Appellate Tribunal. The Tribunal rejected the explanation of the assessee that after the lapse of four years he could not remember the names of the depositors as being no explanation at all . They went on to observe: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld arise for consideration. We shall now deal with the various submissions of learned counsel which he has urged before us at considerable length. The starting point of learned counsel's argument is that proceedings under section 28 of the Income-tax Act are penal proceedings. He has taken his stand on the decision of the Bombay High Court in Commissioner of Income-tax v. Gokuldas Harivallabhdas [1958] 34 I.T.R. 98. In this case it seems to have been assumed that proceedings under section 28 are penal proceedings. This assumption now seems to be doubtful. In C.A. Abraham v. Income-tax Officer, Kottayam [1961] 41 I.T.R. 425; [1961] 2 S.C.R. 765, the Supreme Court has observed at page 430 that section 28 occurs in Chapter IV of the Income-tax Act. That chapter deals with the machinery of assessment . Penalty under section 28 is imposed as a part of the machinery for assessment of tax liability . Additional tax imposed on an assessee for his contumacious conduct is designated as penalty. From this it seems to follow that there is no essential difference between the tax and the penalty. The liability for payment of both is imposed as a part of the machinery of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless the statute contemplates recovery only by a criminal proceeding. He also pointed out that proceedings to recover a penalty remains civil, even though it may partake of a criminal proceeding to an expressed limited extent. It is a civil proceeding, even though the defendant cannot be compelled to be a witness against himself. In Hanby v. Commissioner of Internal Revenue it was held that an assessee, who has been convicted for making a false return once under a statute, may be assessed to a penalty for making a false return of income under a different section of the statute without the immunity from double jeopardy being infringed, because the criminal punishment and the civil liability are parts of one penalty. The concept of double jeopardy is usually considered as requiring a criminal prosecution and the imposition of a penalty is not a criminal prosecution but a civil action. One interested in the comments by the Harvard Law Review approving this decision may refer to 47 H.L.R. 1438. We, therefore, cannot accept the contention that the penalty proceedings require a different or stricter standard of evidence than the assessment proceedings or that the evidence that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the amount was received from a trader by way of a deposit but also it failed to show that it was a receipt of another nature not assessable to income-tax. Under the Income-tax Act only income is assessable and not a mere receipt. Every receipt is not assessable, only certain receipts are. The income-tax authorities cannot assess all receipts; they can assess only those receipts that amount to income. It follows that before they assess a receipt they must find it to be income and they cannot find so unless they have some material to justify their finding. In the absence of sufficient material they cannot treat a receipt as income. Since the nature of a receipt is within the personal or special knowledge of the assessee, the onus lies upon him to prove it; the onus is of proving the real nature of the receipt and not of proving that it is not income. If the materials that he produces satisfy the income-tax authorities that it is not income, they will not assess it and no question of imposition of a penalty will arise at all. If the materials are found to be false, or are not accepted as true, by them, it means that the assessee has not proved that it is a particular kind of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of another kind they cannot treat it as an assessable receipt. In the absence of direct evidence, they cannot treat it as assessable receipt without having materials, such as a false claim, to justify the finding that it is not a non-assessable receipt of any kind. The position is not any different in the penalty proceedings. No penalty can be imposed unless the income-tax authorities find that there has been a concealment of the particulars of the assessee's income or that he has deliberately furnished inaccurate particulars of it and no such finding can be given unless there are materials to justify it. It is for consideration how far it is correct to speak of onus of proof lying upon the income-tax authorities. Onus of proof lies on a party and not on a tribunal that has to give a finding and the income-tax authorities are tribunals and are strictly speaking not parties. A tribunal cannot be a party before its own self. There can be no question of the income-tax authorities leading evidence to prove any fact; what is required under the law is that they must have materials to justify their finding of concealment of the particulars (or of deliberate furnishing of inaccurate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's explanation that the receipt necessarily constituted an income of the assessee. (Emphasis is supplied). This is exactly what we stated earlier; the falsehood of the claim that the receipt is a non-assessable receipt of a particular kind does not automatically and in every case lead to the inference that it is assessable income because it might be a non-assessable receipt of another kind. The inaccuracy in the particulars may have no bearing on the question whether the receipt is assessable or not; one can give inaccurate particulars of a non-assessable receipt also. There was sufficient material in the instant case for holding that the claim made by the assessee that the amount of ₹ 5,000 was a deposit and not income was false and also for the finding that it was income. Since the particulars given by the assessee in the accounts and in the return were different, it was a clear case of concealment of or furnishing inaccurate particulars and the income-tax authorities were justified in imposing the penalty. In the result the question referred to us is answered in the affirmative. Let the reference be returned with this answer to the Tribunal. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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