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TMI Blog1973 (4) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... in I.T.As Nos. 459 and 460 of 1969-70. The facts giving rise to this reference may be summarized as follows. The assessee, Messrs. Sadiq Ali & Bros., is a registered firm with its headquarters at Srinagar and branch at Bombay and deals in Kashmir Arts goods. The firm consists of nine partners. The assessment relates to the accounting years ending March 31, 1964, and March 31, 1965, i.e., assessment years 1964-65 and 1965-66. For these years the assessee filed its return declaring income of Rs. 27,293 for the assessment year 1964-65 and Rs. 54,595 for the assessment year 1965-66. In connection with the return for the assessment year 1964-65, the Income-tax Officer made additions of Rs. 10,985 and Rs. 10,585 in the trading accounts of the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition resulting from unproved deposits and no culpable or wilful negligence on the part of the assessee was involved and, therefore, the penalties were not exigible under the provisions of the Act. This contention appears to have found favour with the Tribunal who observed as follows : " After carefully looking at the facts and the terms of the letters and notings on the order sheet, we are of the opinion that it is a case of unproved cash deposits where the rule laid down by the Supreme Court in Anwar Ali's case would apply. The penalties are accordingly deleted. " The order of the Tribunal is marked as annexure " E " and has been carefully perused by us. As the penalties were deleted by the Tribunal, the applicant, namely, the Addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any proceedings under this Act, is satisfied that any person- (a) has without reasonable cause failed to furnish the return of total income which he was required to furnish under sub-section (1) of section 139 or by notice given under sub-section (2) of section 139 or section 148 or has without reasonable cause failed to furnish it within the time allowed and in the manner required by sub-section (1) of section 139 or by such notice, as the case may be............ " From a perusal of section 271(2) it is manifest that before this section can apply the authority concerned must be satisfied that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income. Although the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be additional tax. But one of the principal objects in enacting section 28 is to provide a deterrent against recurrence of default on the part of the assessee. The section is penal in the sense that its consequences are intended to be an effective deterrent which will put a stop to practices which the legislature considers to be against the public interest. " Although this decision was given with respect to the interpretation of section 28 of the old Act, yet the provisions of section 271 of the Act are exactly the same as those of section 28 of the old Act. In view of the observations of the Supreme Court it is clear to us that unless there are sufficient materials to raise an inference of deliberate concealment or culpable negligence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to bring the case of the assessee within the same. " To the same effect is another decision of the Supreme Court in Commissioner of Income-tax v. Bharat Engineering and Construction Co. wherein their Lordships of the Supreme Court refused to hold that the assessee would be liable to pay penalty merely because his explanation regarding cash deposits was false. In this connection their Lordships observed as follows : "Hence, it is reasonable to assume that those cash credit entries are capital receipts though for one reason or other the assessee had not come out with the true story as regards the person from whom it got those amounts. It is true that in the absence of satisfactory explanation from the assessee the Income-tax Officer m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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