TMI Blog1998 (11) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the assessee. By order of assessment dated August 31, 1992, the Assessing Officer also directed as under : "Penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income and under section 271D for accepting the loan of Rs. 30,000 in cash in violation of the provisions of section 269SS have been initiated separately." The assessee went in revision against the order of assessment challenging the quantum of income fixed by the Assessing Officer. The revision was dismissed by order dated October 20, 1994. The order of assessment and the order dismissing the revision petition filed by the assessee are the subject-matter of CWP No. 3870 of 1997. Notice under section 271(1)(c) calling upon the petitioner-assessee to show cause why the penalty be not levied on him was issued to him. In response to this show-cause notice the assessee did not offer any explanation though ample opportunity was allowed for the purpose. The Assessing Officer formed an opinion that as the assessee had no explanation to offer for not disclosing the correct income, the assessee had concealed the particulars of his income and furnished inaccurate particulars lead ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected Shri R. R. Jindal to be produced along with his account books for verifying the correctness of the loan claimed to have been taken from him by the assessee. The assessee did not wish to be lodged into any controversy and probably the queries might also have invited some trouble for Jindal and hence was reluctant to appear before the Assessing Officer. The assessee thought of and was also advised to surrender the income which he did subject to the condition that no penalty and, interest would be levied on him. The surrender having been accompanied by a condition accepted by the Assessing Officer, and in any case which would be deemed to have been accepted, no penalty was leviable. Learned standing counsel for the Revenue has pointed out that the Assessing Officer had never accepted any condition accompanying the surrender, rather it was unconditional as is reflected by the order sheet dated August 25, 1992, which does not make any mention of any written letter or communication by or on behalf of the assessee and simply records : "Present Mr. S. K. Garg asked to show cause why addition be not made on low drawings, produce the persons and bank pass books. He was asked to show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." The expression "furnished inaccurate particulars of such income" in clause (c) of sub-section (1) of section 271 was preceded by the word "deliberately" which has been omitted by the Finance Act, 1964, with effect from April 1, 1964. Explanation 1 has been inserted by the Finance Act, 1964, but substituted in the present form by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976. A material part of clause (B) of Explanation 1 was added with effect from September 10, 1986. Out of the cases relied on by learned counsel for the petitioner the Supreme Court decision in the case of Sir Shadilal Sugar and General Mills Ltd. [1987] 168 ITR 705 (SC) relates to the assessment year 1958-59 made in the 1922 Act. Amalendu Paul's case [1984] 145 ITR 439 (Cal) relates to a return filed on June 28, 1963. Mansa Ram and Son's case [1977] 106 ITR 307 (All) relates to the assessment year 1951-52 and Kishan Singh Chand's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnishing an explanation or the same having been found untenable. We may place on record that the two Allahabad decisions, namely, in the case of Mansa Ram and Sons [1977] 106 ITR 307 and in the matter of Kishan Singh Chand [1977] 106 ITR 534 were cited before the Allahabad High Court itself in a later decision in Biland Ram Hargan Dass v. CIT [1988] 171 ITR 390, are distinguished. It was held that mere surrender or acceptance of an amount as income by the assessee at a subsequent stage is not necessarily proof of bona fide inadvertence or omission earlier. It is all a question of fact to be determined in the facts and circumstances of each case. In the case at hand it is a disputed question whether the surrender was accompanied by any condition or not and even if accompanied whether such condition was accepted by the Assessing Officer. In the counter filed by the Revenue though the availability of the letter referred to in para. 6 above and signed by counsel for the assessee has been accepted, a doubt has been expressed on the exact date on which the letter might have been filed on the record inasmuch as it does not bear any presentation endorsement by the Assessing Officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate thereof is Rs. 20,000 or more. Section 271D provides that if a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. The record of the proceedings shows that the Assessing Officer had discarded the theory of the assessee having taken any loan. He accepted the surrender of the amount as income of the assessee. It was open to the Assessing Officer not to accept the surrender, treat the amount as loan and then to hold the petitioner liable to penalty under section 271D for non-compliance with section 269SS. The Assessing Officer cannot be permitted to treat the amount of loan as income for the purpose of assessing tax thereon while framing the assessment and at the same time to treat it as a loan for the purpose of section 269SS read with section 271D and subject the transaction to penalty. Such proceedings would be self-contradictory. For non-compliance with the provisions of section 269SS, the genuineness of the transaction as loan was doubted by the Assessing Officer and so the amount was surrendered by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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