TMI Blog2001 (9) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the appellant. The appellant has sought to challenge the order passed by the Income-tax Appellate Tribunal sustaining the levy of penalty under section 271(1)(c) of the Income-tax Act, 1961 (for short "the Act of 1961"), in respect of additions made in the income of the appellant as a result of cash found in his possession, the source of which was not explained to the satisfaction of the assessing authority. The facts relevant for the present purposes, which need to be noticed are that the assessee was found in possession of a sum of Rs. 2,30,000 during the previous year relevant to the assessment year 1990-91 by the Customs authorities. The statement of the assessee was recorded by the Customs authorities on May 24, 1989, in which the assessee admitted the said amount to be his own, which he has acquired by indulging in purchase and sale of contraband gold. The said amount was handed over to the income-tax authorities under section 132A of the Income-tax Act, 1961, for taking proceedings in that regard under the Income-tax Act. This led to assessment of the said sum in the hands of the assessee by rejecting his explanation by invoking the deeming provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and because of that it was held by the Customs authorities that it is not proved that the amount found in the possession of the assessee is linked with the contraband gold, and that resulted in his exoneration from the proceedings under the Customs Act, would not detract from the fact that he made the said admission before the Customs authorities owning the amount to be his own and not belonging to somebody else. Before the income-tax authorities, the assessee disowned the amount to be his own at all but has attributed the ownership or its source to five different parties by way of cash credits. It was claimed by the assessee that money has been borrowed from five different persons ranging between Rs. 30,000 to Rs. 80,000. The enquiry was directed to each of the five alleged lenders of money. The assessing authority in a detailed order found that none of the five persons were in a position to advance the stated sum respectively. It was found that each one of the lenders in his turn stated that he has borrowed money from others. Radhey Shyam was alleged to have lent Rs. 80,000. He in turn is stated to have arranged Rs. 70,000 from others. Shankar Lal Soni had arranged Rs. 50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustom authorities, to be the income of the assessee of the previous year relevant to the assessment year in question, this deeming provision cannot extend to penalty proceedings under section 271(1)(c) and that since the Assessing Officer or the Commissioner of Income-tax (Appeals) have not invoked Explanation 1 to section 271(1)(c) specifically, the penalty cannot be sustained with its aid. It needed, the assessee contends, that a clear notice of intention to invoke Explanation 1 is required to be given to the assessee. It is true that the provisions of section 69A by itself cannot be invoked for holding it to be the income of the assessee of the previous year in question for the purpose of penalty proceedings under section 271(1)(c). However, with effect from April 1, 1976, Explanation 1 was substituted in the following terms, which was in force during the relevant assessment year in question. The relevant provisions of the Act for the present purposes read as under: "271. Failure to furnish returns, comply with notices, concealment of income, etc.--(1) If the Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed during the course of assessment proceedings is completed by calling for an explanation from the assessee. On particular conclusion reached, the operative part of legal fiction comes to life and not otherwise. Thus, it is a deeming provision for reaching a conclusion and not for starting an enquiry with a presumption against the assessee. In this connection further distinction is clearly noticeable between the two clauses of Explanation 1. Clause (A) refers to a case where no explanation is furnished by the assessee about such additions made or deduction disallowed, or if explanation is furnished by the assessee, it is found to be false. Finding an explanation to be false is akin to a fact disproved in contrast to a fact "not proved" as defined in the Evidence Act. In such event the conclusion that is to be arrived at is that the amount added or disallowed in computation is deemed to represent the income in respect of which particulars have been concealed. Clause (B) comes into the picture only when some explanation is furnished by the assessee. It does not come into the picture where the assessee does not furnish any explanation; because such a case is governed by clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income-tax (Appeals) has come to a definite finding that such explanation furnished by the assessee is "false". The Tribunal was also in agreement with the same. In the light of the brief resume of facts noticed by us, we are of the opinion that this finding of fact has been reached reasonably on appreciation of evidence and considering the facts and circumstances relevant for the enquiry and does not give rise to a question of law that may require reconsideration Of such finding as a substantial question of law in this appeal. For giving effect to the legal consequence on certain existing state of affairs, which has been ordained by a statute, does not require any specific notice of intention to invoke the statutory provision. The statutory provision in question comes into operation by its own force once the conditions mentioned in clause (A) or clause (B) come into existence. It does not depend on the option of the assessing authority to invoke by specific mention to reach the conclusion envisaged by law once the conditions mentioned in clause (A) or clause (B) of the Explanation 1 to section 271(1)(c) are established. In these circumstances, the question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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