TMI Blog1972 (5) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. This claim was made on account of the provisions of the East Punjab General Sales Tax (Amendment) Act, 1958 (Punjab Act No. 7 of 1958), which was revalidated by the Punjab General Sales Tax (Amendment and Validation) Act, 1960 (Punjab Act No. 17 of 1960), and the said Act was ultimately repealed on October 3, 1961. In the return filed by the assessee for the assessment year 1962-63, the assessee did not disclose the income of Rs. 41,067 which income had accrued to him in view of the provisions of section 41(1) of the Income-tax Act, 1961, because of the repeal of the Punjab General Sales Tax (Amendment and Validation) Act, 1960 (Punjab Act No. 17 of 1960), on October 3, 1961. The Income-tax Officer issued notice under section 148 of the Income-tax Act, 1961, on the ground of escapement of the income of the assessee for the assessment year 1962-63 and in response to the said notice, the assessee filed another return showing the same income as originally shown in the return. However, there was a note in the return that there was no escapement of income. During the course of the assessment proceedings, the assessee claimed that the amounts of purchase tax claimed and allowed as ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability which took place was under the peculiar circumstances where even the Punjab Government did not know its mind much less the assessee. The Act No. 7 of 1958 was challenged in the High Court which held it to be invalid. An Amendment and Validation Act No. 17 of 1960 was passed on May 10, 1960, which was subsequently repealed on October 3, 1961, by Act No. 28 of 1961. In such confused circumstances under which the remission has taken place there is no intention on the part of the assessee to furnish inaccurate particulars. 2. That section 41(1) was a deeming provision and that the income, which is deemed to be the income of the assessee for the purposes of assessment, cannot form the basis for penalty which pre-supposes that the assessee has concealed the particulars of income or furnished inaccurate particulars thereof. It is in these circumstances that the question of law has been referred to this court. In view of the peculiar facts and circumstances of this case, we are not inclined to give our opinion on the question referred to us in the affirmative or in the negative. We propose to express our opinion on the import of the legal provisions on the interpretation of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r finding an assessee guilty is that of 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. It was further held that the bare fact that the explanation offered by the assessee in 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 penalty must expressly find that the assessee's explanation is false. In our opinion no exception can be taken to the view expressed by the Madhya Pradesh High Court. The provisions of section 271(1)(c) of the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be made the basis for penalty. As regards the first ground, it may be pointed out that it was not the finding that the assessee had no knowledge of the repealing Act or that he under a mistaken belief of the law or of facts failed to disclose the particulars of the income in his original return filed by him for the assessment year 1962-63. Therefore, the first ground mentioned in the order is of no consequence. As regards the second ground, whether the income had actually accrued or it had accrued because of the deeming provisions of the Act, that would not make any difference as far as the question whether a particular income has accrued or not is concerned. The learned Appellate Tribunal took the view that the said income having accrued because of the deeming provisions of the Income-tax Act, therefore, it cannot form the basis for the penalty. We do not find any basis for this in the provisions of the Income-tax Act. There is absolutely no difference between an actual income accruing or accruing because of the deeming provisions of the Income-tax Act as would be apparent from the provisions of sections 5(a), 7 and 8, etc., of the Income-tax Act, 1961. While considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 1962-63. It is apparent that the authorities below did not consider this case keeping in view the relevant provisions of the Act and on the other hand without examining the facts and finding out whether there was any conscious concealment or deliberate furnishing of inaccurate particulars of the income decided the case. It was contended by Mr. Harinder Singh, the learned counsel for the assessee, that the assessee firm, before it received the notice under section 148 of the Income-tax Act, did disclose in its earlier return about the amount in question. Therefore, the learned counsel contends that there is no concealment and there is no deliberate furnishing of inaccurate particulars. However, we cannot notice this fact as this fact is not contained in the statement of the case, but because we are not answering the question referred to us in the affirmative or in the negative and we are sending the case back to the learned Appellate Tribunal to examine the same from its true perspective in view of the legal principles enunciated above, therefore, it will be open to the assessee to put forth all his pleas before the Tribunal in order to show that the concealment was not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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