TMI Blog1989 (1) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was also asked to file Affidavit of Smt. Shyama Keshwani which he could not do, as Smt. Shyama Keshwani had died on 1st Jan., 1978. However, the assessee had filed the Affidavit dt. 9th March, 1979 of the husband of Smt. Shyama Keshwani with the ITO, wherein he had stated on solemn oath that his wife had gifted the amount in question to the assessee. 5. On the appreciation of the material facts, available on record, the ITO was not satisfied with the assessee's explanation regarding the nature and source of ₹ 2,64,781. Invoking the provisions of s. 68 of the Act, he made addition of ₹ 2,64,781, whereby as against loss of ₹ 5,59,068 declared by the assessee in his Return, the ITO had determined the total income of the assessee at ₹ 25,440. The relevant portion of the order of the ITO reads as under : 10. Having regard to all the facts as aforesaid, I have to conclude that the assessee has not conclusively proved the nature and source of the amount of ₹ 2,64,781 credited to his account with the Vijaya Bank, Cuffe Parade on 5th Dec., 1975. The amount is therefore considered as income under s. 68 of the Act. 6. Being aggrieved by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal, in its order dt. 27th July, 1982, restored the addition of ₹ 2,64,781 in the following manner : 9. Thus, on a consideration of the evidence and circumstances, we hold that the assessee have totally failed to establish the capacity of the donor and the genuineness of the alleged gifts and that the Commissioner (A) has erred in accepting the case of the assessee. 8. It may be mentioned that the assessee had made an application under s. 256(1) of the Act before the Tribunal to draw up a Statement of the Case and refer a question to the Hon'ble High Court in respect of the addition of ₹ 2,64,781 sustained by the Tribunal. The Tribunal, however, rejected the said application. Thereafter, the assessee made an application under s. 256(2) of the Act before the Hon'ble High Court and the High Court High Court, vide their order dt. 10th March, 1987 in ITA No. 8 of 1984, directed the Tribunal to draw up a Statement of the case and refer the following question for their opinion: Whether on the facts and the circumstances of the case and on a proper interpretation of s. 68 of the IT Act, 1961, the sum of ₹ 2,64,781 was assessable as income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y show that the explanation given by the appellant is highly improbable. Considering these facts I am of the opinion that the explanation given by the appellant is not bona fide. Accordingly I hold that the appellant's case is not covered by the proviso to Expln. 1 to s. 271(1)(c) and under the provisions of this Explanation the amount of ₹ 2,64,781 represents the income in respect of which particulars have been concealed. The ITO is therefore justified in imposing the penalty of ₹ 1,80,440 under s. 271(1)(c) r/w the Expln. 1. I, therefore, confirm the penalty order passed by him. 11. Being aggrieved by the order of the CIT(A), the assessee has come up in appeal before the Tribunal. The learned Counsel for the assessee reiterated the submissions which were made before the IT authorities and strongly urged that on the facts and circumstances obtaining in the instant case there was no justification on the part of the IT authorities to impose penalty under s. 271(1)(c) of the Act. The learned Counsel for the assessee developed his case mainly on the following line : (i) Explanation 1(B) to s. 271(1)(c) of the Act does not apply to his case. (ii) Even assuming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial difference between the provisions of the original Explanation and that brought on the statute w.e.f. 1st April, 1976. Inviting our portion to the order of the CIT(A) in the quantum proceedings (the relevant protein of which is reproduced above), the learned Counsel for the assessee highlighted the fact that the CIT(A), on the appreciation of the material already brought on record, was satisfied that the assessee had successfully explained the nature and source of ₹ 2,64,781 and, therefore, the ITO was not justified in invoking the provisions of s. 68 of the Act in this regard. In other words, the learned Counsel for the assessee wanted to impress upon us that the explanation given by the assessee regarding the nature and source of ₹ 2,64,781 was accepted as bona fide by a senior officer of the rank of the CIT(A). Thereafter, the learned Counsel for the assessee invited our attention to the order of the Tribunal in the quantum matter and pointed out that the Tribunal had restored the addition of ₹ 2,64,781 mainly on the inferences drawn by it on the material available on record without any definite finding that the amount involved was the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee cannot be any support from the Proviso to the said clause. If we were to accept the stand taken on behalf of the assessee, then we would be asking the ITO to prove the impossible. According to him, the expression bona fide used in the Proviso has to be read as in good faith . However, in the instant case since the assessee had failed to explain the nature and source of ₹ 2,64,781, as held by the Tribunal, the IT authorities were fully justified in imposing penalty under s. 271(1)(c) of the Act. In support of his various submissions, the learned representative for the Department relied on the decision of the Punjab Haryana High Court (Full Bench) Vishwakarma Industries vs. CIT (1982) 29 CTR (P H) 243 (FB) : (1982) 135 ITR 652(P H) (FB), Dr. (Mrs) K.D. Arora vs. CIT (1986) 52 CTR (Pat) 95: (1986) 162 ITR 481(Pat), Chuharmal vs. CIT (1988) 70 CTR (SC) 88: (1988) 172 ITR 250(SC) and CIT vs. Mussadilal Ram Bharose (1987) 60 CTR (SC) 34: (1987) 165 ITR 14(SC). He also relied on the orders of the Tribunal in the cases of ITO vs. Bellias and Marconi (1985) 23 TTJ (Cal) 516: (1985) 14 ITD 361(Cal) and ITO vs. Geep Industrial Syndicate Ltd. (1987) 23 ITD 448. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the computation of his total income under the Act. Not only that the assessee had supported with documentary evidence his explanation that he had received ₹ 2,64,781 by way of gift from his sister. We, therefore, entirely agree with the stand taken on behalf of the assessee that the provisions of cl. (B) of the Expln. 1 to s. 271(1)(c) of the Act would not be attracted in the instant case. Even assuming for the sake of argument that the said clause would be attracted in the instant case, it is difficult to hold that the explanation given by the assessee regarding the nature and source of ₹ 2,64,781 was not a bona fide. We have come to this conclusion as the CIT(A) had accepted the assessee's explanation in the quantum proceedings and the Hon'ble High Court was pleased to grant reference under s. 256(2) of the Act in respect of invoking the provisions of s. 68 of the Act. In this view of the matter, even assuming for the sake of argument that the assessee's case falls within cl. (B) of the Expln. 1 of s. 271(1)(c) of the Act, the assessee's case could still be saved by the provisions contained in the Proviso to the said Clause. Further, after carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
