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TMI Blog1973 (6) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee had pledged on April 18, 1961, 1,491 bags of sugar with the Bank of Bihar for the purpose of obtaining an overdraft. The stock register of the date--April 18, 1961--showed that the actual number of bags in the hands of the assessee was 1,210 and that the Income-tax Officer detected a discrepancy of 281 bags. The assessee was asked to explain this discrepancy and it submitted its explanation in its letter dated June 29, 1963, to the effect that an inflated stock was shown with a view to obtain a larger amount of overdraft. The Income-tax Officer asked the assessee to get confirmation from the bank that the stock lying with them did not represent the actual state of affairs. The assessee refused to comply with this requisition. The Income-tax Officer treated the value of 281 bags. of sugar amounting to Rs. 29,495 as the assessee's income from undisclosed sources. He added the said income in the assessment order. Thereafter, he initiated proceedings under section 271(1)(c) of the Act and followed the procedure prescribed in section 274. The case was referred to the Inspecting Assistant Commissioner. He gave notice and an opportunity to the assessee to be heard to substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see that an imaginary, inflated stock was shown to the bank seems to have been accepted by the Income-tax Appellate Tribunal. At the relevant time the provision of law contained in section 271(1)(c) was exactly the same as the one contained in section 28(1)(c) of the Indian Income-tax Act, 1922. The liability attracting the imposition of penalty under the said provision of law is created if the assessee "has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income ". The word "deliberately" has been omitted by Central Act 5 of 1964. Since this case relates to a per iod prior to April 1, 1964, when Act 5 of 1964 came into force, it has to be judged with reference to the provision of law contained in section 271(1)(c) wherein , prior to that date, the word " deliberately " was also there. There are several decisions of this court as also of the Supreme Court with reference to the provision of law contained in section 28(1)(c) of the Indian Income tax Act, 1922. The purport of the decisions which I shall briefly be discussing in my judgment seems to be that in order to justify the imposition of a penalty the income-tax department has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the penalty could be legally imposed under section 271(1)(c) of the Act as it stood at the relevant time. The Tribunal in its appellate order has relied upon a decision of this court to which I was a party in Commissioner of Income-tax v. Mohan Mallah. In this case, the decisions of this court in earlier two cases were followed, namely, Khemraj Chagganlal v. Commissioner of Income-tax and Lakshmi Narain Shambhuram v. Commissioner of Income-tax, the two decisions in Murlidhar Tejpal v. Commissioner of Income-tax and Bhagwandas Shyamsunder v. Commissioner of Income-tax were distinguished. Learned counsel for the department placed strong reliance on the latter two decisions. It would be noticed from the facts of the four cases aforesaid that there is no appreciable difference in the principle laid down in them. Question is of its application to the particular facts of a case. In the case of Murlidhar Tejpal, the earlier decision of this court in the case of Khemraj Chagganlal was distinguished and it was pointed out that while in the earlier case there were circumstances to show that the explanation of the assessee might be correct, in the later case the amount had been shown to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, which explanation has been found to be false, it does not follow that the receipt constitutes his taxable income. Another point is whether a finding given in the assessment proceedings that a particular receipt is income after rejecting the explanation given by the assessee as false would, prima facie, be sufficient for establishing, in proceedings under section 28, that the disputed amount was the assessee's income. It must be remembered that the proceedings under section 28 are of a penal nature and the burden is on the department to prove that a particular amount is a revenue receipt. It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income. It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive. However, it is good evidence. Before penalty can be imposed the entirety of circum stances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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