TMI Blog2006 (1) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... of unexplained money, appears to us the correct, proper and reasonable conclusion. Therefore, the high denomination notes which were in the possession of the assessee as on January 24, 1978, cannot be said as "unexplained money", which the assessee had not disclosed in his return of income and, therefore, it would not warrant levy of penalty under section 271(1)(c) of the Act. - - - - - Dated:- 16-1-2006 - Judge(s) : H. L. DATTU., H. N. NAGAMOHAN DAS. JUDGMENT The judgment of the court was delivered by H.L. Dattu J.-At the instance of the Revenue, the Income-tax Appellate Tribunal has referred a question of law for our consideration and decision arising out of the orders passed in I.T.A. No. 1876 of 1988 dated October 31, 1995. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. The article concerned is required to be valued at the time when it is found. In the instant case, the assessee tendered the high denomination notes to the Reserve Bank of India on January 24, 1978, only. In terms of the Ordinance issued by the Government of India, those notes had already ceased to become legal tender and on the top of it, it was also not possible to get those notes exchanged through Reserve Bank of India inasmuch as the time period for doing so had already elapsed on January 20, 1978. This is borne out by the discussions made by the Additional Secretary to Government of India (Ministry of Finance, Department of Economic Affairs, Banking Division) in her communication dated July 2, 1980, addressed to the assessee, a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see by applying the provisions of section 69A itself is unsupportable. The question of levying penalty for concealment on the said amount, therefore, cannot arise. Taking into consideration all these facts, therefore, we reverse the decisions of the lower authorities and cancel the penalty." On the request made by the Revenue, the Tribunal has referred the following question of law said to be arising out of the order passed by the Tribunal in I.T.A. No. 1876/1988, dated October 31, 1995 for the assessment year 1978-79. It is as under: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the provisions of section 69A were not applicable to the present case inasmuch as when the high d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of income, but it is the specific case of the Income-tax Officer that the assessee is found to be the owner of a sum of Rs. 1,35,000 on January 24, 1978, and that money is not recorded in the books of account, if any, maintained by the assessee for any source of income. In our view, it would have made substantial difference, if the Income-tax Officer had levied penalty for an offence under section 69 of the Act. Section 69A of the Act authorises the Income-tax Officer that, in any financial year, if the assessee is found to be the owner of any money, bullion, etc., and if the same is not recorded in the books of account, if any, maintained by him for any source of income, and if the assessee offers no explanation about the nature a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him is not satisfactory, the money may be deemed to be the income of the assessee and, secondly, for the purpose of section 271(1)(c) of the Act, there must be concealment of income or furnishing of inaccurate particulars of such income by the assessee during the relevant assessment year and since on the day, namely, on January 24, 1978, when the assessee was found to be in possession of high denomination notes of Rs. 1,35,000, the same had no value as "money", therefore, the said amount cannot be deemed to be the income of the assessee and, therefore, cannot be inferred as concealed income warranting levy of penalty under section 271(1)(c) of the Act. Having heard learned counsel for the parties to the lis and after carefully considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue as well as the impression on money. The expression "money" has different shades of meaning. In the context of income-tax provisions, it can only be a currency token, bank notes or other circulating medium in general use, which has the representative value. Therefore, the currency notes on the day when they were found to be in possession of the assessee should have had the representative value, namely, they could be tendered as a money, which has intrinsic value. In the instant case, the final fact-finding authority, namely, the Income-tax Appellate Tribunal, after noticing the Ordinance issued by the Central Government, coupled with the fact of the Reserve Bank of India refusing to exchange the high denomination notes when they were te ..... X X X X Extracts X X X X X X X X Extracts X X X X
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