TMI Blog1967 (8) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... a motor vehicle and made payments for the purchase of the vehicle us under : Rs. 1. 26-8-1958 ... 1,000 2. 8-9-1958 ... 9,000 3. 23-9-1958 ... 3,800 4. 23-9-1958 ... 3,450 body-building 5. 30-9-1958 ... 9,000 6. 7-10-1958 ... 8,000 -------------- 31,250 -------------- The assessment for the year 1959-60 was, therefore, reopened under section 147 of the Act. The assessee's explanation with regard to these payments was that on 26th August, 1958, he had a cash balance of Rs. 14,168, and out of this cash balance he made a payment of Rs. 1,000 on 26th August 1958, and of Rs. 9,000 on 9th September, 1958. This explanation was rejected by the Income-tax Officer, Chhindwara. The Income-tax Officer found that in the cash book there were no entries of the withdrawal of Rs. 10,000, that in the rokad there were certain jottings in pencil, and that if the payments had been actually made from the cash balance, then the amounts withdrawn would have appeared merged in the rokad entries themselves and not in pencil jottings. In regard to the source of payment of the balance of the purchase price, the assessee said that he was allowed depreciation amount on his trucks for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance granted for statutory purposes before computing the total income to explain away his investments to the extent of Rs. 21,170 .... It is thus clear that the assessee has financed and (sic) purchase of truck from some undisclosed sources." The Inspecting Assistant Commissioner concluded by observing that the "fact of concealment of income is proved beyond reasonable doubt" and imposed a penalty of Rs. 5,000 on the assessee under section 271(1)(c) of the Act. The assessee then preferred an appeal before the Appellate Tribunal against the order of the Inspecting Assistant Commissioner imposing penalty on him. The Tribunal found that the explanation which the assessee offered with regard to the payment of Rs. 10,000 "from the cash balance stands completely disproved". As regards the explanation about the payment of the balance, the Tribunal said that in the manner in which the assessee's accounts were maintained there was nothing prima facie unreliable in his explanation so as to be rejected in penalty proceedings and that with regard to this payment "the position is slightly more in favour of the assessee". The Tribunal went on to say that even if the assessee's explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a criminal prosecution. The assessment proceedings and penalty proceedings are different in their nature. The findings given in assessment proceedings are no doubt relevant and admissible in penalty proceedings. But they do not operate as res judicata so as to preclude the production of other evidence in penalty proceedings to show that the assessee concealed his income or to rebut this charge. Again, the bare fact that the explanation offered by the assessee in the assessment proceedings was rejected and it was held in those proceedings that he had concealed his income or that the explanation was unsatisfactory by itself cannot be made the basis of the conclusion that he has been guilty of deliberately concealing the particulars of his income. No doubt, if the assessee's explanation is found to be deliberately false, then it is possible to infer that he concealed his income. But the authority competent to impose a penalty must expressly find that the assessee's explanation is false. These principles have been laid down in Commissioner of Income-tax v. Gokuldas Harivallabhdas, Khemraj Chagganlal v. Commissioner of Income-tax, Bhagwandas Shyamsunder v. Commissioner of Income-tax, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncealment of the particulars or deliberate furnishing of inaccurate particulars. Now, here, in the penalty proceedings the only material that was before the Inspecting Assistant Commissioner was that the assessee's explanation about the source of payment of Rs. 31,250 had been rejected by the Income-tax Officer in reassessment proceedings. The Income-tax Officer no doubt described the assessee's explanation as obviously "phoney" that is, counter-feit, and as without any substance. But the Inspecting Assistant Commissioner did not express his own view about this explanation. After pointing out why the assessee's explanation could not be accepted, he merely stated his conclusion that "cash came from concealed income in possession of the assessee for making these payments" and that "the fact of concealment of income is proved beyond reasonable doubt". The Inspecting Assistant Commissioner nowhere said that the explanation of the assessee was palpably false. The Tribunal also did not find that the explanation of the assessee was false. What it found was that the explanation which the assessee offered with regard to the payment of Rs. 10,000 "from the cash balance stands completely d ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
