TMI Blog2002 (6) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... nd unloading and also transportation of goods form one plant to another. The original return of income was filed on 18th May, 1992 for assessment year 1991-92 in which total receipts of ₹ 19,41,233 were shown and after debiting expenses, net profit of ₹ 99,960 was shown. The Assessing Officer examined bank account of the assessee and found that the total amount received by the assessee is at ₹ 23,82,732. And when this fact was brought to the notice of the assessee, the assessee revised the return of income on 11-3-1994 showing income of ₹ 1,17,560. In the revised return total payments have been shown at ₹ 24,31,183 and after deducting the cash payments, the total receipts were shown at ₹ 24,11,183. In the revised return, the assessee, though has shown enhanced receipts at ₹ 24,31,182, but simultaneously has shown the enhanced expenditure also which is mentioned by the Assessing Officer at page 1 of the assessment order. The Assessing Officer considered that the assessee is maintaining books of account and, therefore, without evidence figure of expenses cannot be accepted and, therefore, he did not accept the enhanced figure of expenses. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce between the assessed and returned income, the Assessing Officer levied the impugned penalty against minimum of ₹ 27,357 under section 271(1)(c). 3. It has been argued that in view of the following decisions : (i) 171 ITR 683, (ii)160 ITR 532, (iii) 106 ITR 151, (iv) 107 ITR 681, (v) 111 ITR 849, (vi) 188 ITR 206, of Hon ble Allahabad High Court, merely on account of estimated additions no penalty under section 271(1)(c) can be levied. For this proposition, reliance has been placed upon my order in the case of M/s. Padma Pathak for the assessment year 1987-88 dated 29th June, 1992 in appeal No. 26/w-1/MZP/91-92. 4. In view of the above contentions, penalty levied by the Assessing Officer is hereby cancelled. It is not borne out from the orders as to why almost twice the minimum amount of penalty has been levied on the appellant. 5. In the result, the appeal is allowed. Sd. Dr. J.K. Goyal, CIT (Appeals), Allahabad. 5. It is argued by the Ld. D.R. that the assessee has shown total receipts at ₹ 19,41,233 in the original return of income filed on 18th May, 1992. It is only after the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer on examination of the assessee s Passbook. According to the Ld. D.R., the information given in the original return of income has been utilised and the revised return was non est and not illegal. According to the Ld. D.R., the fact remains that the enhanced receipts were found out by the Assessing Officer and the Assessing Officer detected actual receipts after examining the copy of bank account of the assessee and the receipt of enhanced amount was accepted by the assessee. According to the Ld. D.R., it is a fit case for levy of penalty. Therefore, the revised return of income filed by the assessee on 11th March, 1994 declaring income of ₹ 1,17,560 was non est as it was not in accordance with the provisions of law. The assessee was not entitled to revise return under section 139(5) as the original return of income was filed on 18-5-1992 under section 139(4) of the Act. The assessee can file revised return only if the original return of income is filed under section 139(1). Moreover, the assessee can furnish revised return of income only if he discovers any omission or any wrong state- ment therein before the expiry of one year from the end of the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 142(1) of the Income-tax Act and, therefore, the revised return filed by the assessee was non est. The Assessing Officer has completed the assessment under section 143(3) of the Income-tax Act, by estimating the net income at the rate of 6.5% subject to depreciation. The validity of the assessment cannot be challenged in penalty proceedings in view of the decision of the Jammu and Kashmir High Court in the following cases : 1.Hotel Highland Park s case (supra), 2.Jawahar Lal Mehra s case (supra), 3.S. Arumugham s case (supra). Therefore, there is no merit in the argument of the assessee s counsel that penalty cannot be levied because assessment was completed on the basis of revised return as the revised return itself was invalid. 9. The Assessing Officer has completed the assessment on the basis of original return of income filed by the assessee on 18-5-1992. He has not acted on the revised return because in the revised return of income, the assessee has shown inflated expenses under certain heads, which were not accepted by the Assessing Officer. Since the expenses debited to Profit and Loss Account in the revised return of income were not accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record, then the penalty for concealment can be imposed even on the basis of estimate of income. Similarly in the case of Samunder Bhan Sadh v. CIT [1991] 188 ITR 638 1 (All.), the facts of the case were that the assessee, an individual, carried on business in printing power-loom cloth of cheaper varieties and sarees. For the assessment year 1971-72, the concerned year, he filed the return on May 25, 1971, disclosing an income of ₹ 21,400. He arrived at the income on the basis of an estimate. Later he filed a revised return disclosing an income from business of ₹ 33,000. The Income-tax Officer, however, did not accept the estimate. He estimated the sales turnover at ₹ 12,40,000 and determined the net income at ₹ 80,600 and this was upheld by the Tribunal. Penalty was imposed under section 271(1)(c) of the Income-tax Act, 1961 and the Tribunal confirmed it. The Tribunal did not accept the assessee s plea that he did not maintain accounts. It observed that a businessman, having turnover of ₹ 11 lakhs, would not but have maintained accounts. There was a vast disparity between the sales turnover disclosed in the first return and the one disclosed in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. The Hon ble High Court held as under in the case of Prathi Hardware Stores (supra) : A conspectus of the Explanation added by the Finance Act, 1964, and the subsequent substituted Explanation makes it clear that the statute visualised the assessment proceedings and penalty to be wholly distinct and independent of each other. In essence, the Explanation (both after 1964 and 1976) is a rule of evidence. Presumptions which are rebuttable in nature are available to be drawn. The initial burden of discharging the onus of rebuttal is on the assessee. The rationale behind this view is that the basic facts are within the special knowledge of the assessee. Section 106 of the Indian Evidence Act, 1872 gives statutory recognition to this universally accepted rule of evidence. There is no discretion conferred on the Assessing Officer as to whether he can invoke the Explanation or not. Explanation 1, which primarily concerns the case at hand, automatically comes into operation when, in respect of any facts materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharged by any fantastic explanation. It must be an explanation acceptable to the fact-finding body. The position on and after April 1, 1976, is clear that where, in respect of any item of credit, the assessee has offered an explanation which the taxing officer has considered to be false or the assessee has offered an explanation but no material or evidence to substantiate it, he shall be deemed to have concealed such income within the meaning of section 271(1)(c). A further condition was imposed with effect from September10, 1986, with which we are not concerned. In the case at hand, the explanation of the assessee so far as the genuineness of credit of the lender was concerned was not accepted. The assessee s appeal before the Appellate Assistant Commissioner failed. It was observed that the assessee offered an explanation but no material or evidence to substantiate the same. The Tribunal came to a presumptuous conclusion that the assessee may have succeeded in the appeal had it come before the Tribunal against the addition. No basis or reason has been indicated for such conclusion. A narration of facts would go to show that the Appellate Assistant Commissioner and the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second return, the assessee debited labour payments at ₹ 14,26,209. But there was no evidence how this figure of ₹ 14,26,209 has been arrived at. No books of account were produced before the Assessing Officer to prove the expenses of ₹ 14,26,209 debited to Profit and Loss Account and claimed in the second return of income. Similarly, the assessee claimed excess deduction of ₹ 1,30,639 against the truck/tractor charges, but there was no evidence. The assessee also claimed deduction of ₹ 55,005 in the second return of income under the Site Kharch as against ₹ 35,005 in the original return of income. The assessee himself has shown total receipts of ₹ 24,31,183 in the second return filed on 11-3-1994. The assessee has only shown receipt at ₹ 19,41,233 in the original return of income filed on 18-5-1992, which was very late. It is clear from the facts of the case that the assessee has not disclosed correct amount received by the assessee in the original return of income filed on 18-5-1992. The assessee under-stated the receipts in the original return of income by ₹ 4,89,959 (Rs. 24,31,182 shown in the second return - ₹ 19,41 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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