TMI Blog1998 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... e been referred at the instance of the Revenue by the Appellate Tribunal for our consideration : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified and had valid materials to hold that on merits there is no case for levy of penalty under section 271(1)(c) ? 2. Whether the Tribunal was justified on the material on record and in law to hold that no penalty could be validly levied under section 271(1)(c) in respect of addition made invoking section 68 of the Income-tax Act ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in cancelling the penalties imposed without considering the applicability of Explanation to section 271(1)(c) of the Income-tax Act, 1961 ?" The quest ions of law referred to us in Tax Cases Nos. 1458 and 1459 of 1986 are almost similar to the questions of law referred in Tax Cases Nos. 913 and 914 of 1986 and the questions read as under : "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified and had valid materials to hold that on merits there is no case for levy of penalty under section 271(1)(c) ? 2. Whether the Tribunal was justified o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts appearing in the names of 12 parties and a sum of Rs. 9,664 being the interest alleged to have been paid to the creditors. On the same day, the assessee-firm filed its revised return for the assessment year 1971-72 disclosing a further income of Rs. 7,200 being the interest alleged to have been paid to various creditors. Since the assessments had been completed, the revised returns filed were regularised by issue of notice under section 148 of the Act and the assessments were completed determining the total income of Rs. 2,49,420 for the assessment year 1970-71 and Rs. 1,70,880 for the assessment year 1971-72. The Income-tax Officer on the basis that there was concealment of particulars of income in the original returns filed, initiated proceedings for penalty by issue of notice under section 274 read with section 271(1)(c) of the Act. After hearing the assessee-firm, the Income-tax Officer levied a penalty of Rs. 84,664 for the assessment year 1970-71 and Rs. 7,200 for the assessment year 1971-72. The assessee-firm filed appeals before the Commissioner of Income-tax (Appeals) challenging the orders levying penalty. The Commissioner of Income-tax (Appeals) cancelled the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer noticed that the income admitted in the revised return was Rs. 2,49,424 which included credits amounting to Rs. 75,000 with interest of Rs. 9,664. It is, no doubt, true that the assessee filed the revised return after the completion of the original assessment on April 25, 1970. The Income-tax Officer subsequently issued a notice of reassessment and the revised return filed was taken to have been filed in response to the notice under section 148 of the Act. The reassessment was also completed on the basis of the revised return. The case of the assessee before the Income-tax Officer was that the assessee had filed the return voluntarily before the detection by the Department and there was no intentional concealment on the part of the assessee. The Income-tax Officer relied upon certain statements made in the petition filed before the Commissioner of Income-tax under section 271(4A) (now 273A of the Act) and, according to him, the statement made in the petition would be sufficient to show that there was concealment of income in the original return. According to the officer, since there was no supporting document in favour of the creditors, the assessee-firm was making the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the settlement on terms that the penalty may not be imposed and there was no confession of concealment of income either in the letter or in the revised return. The Tribunal also held that the Department has not established that the assessee had concealed income or there was an unequivocal admission of concealment of income and the imposition of penalty was not warranted on the facts of the case. The Tribunal also held that there is no evidence except the provisions of section 68 of the Act to show that the credits added were the income of the assessee. We are of the opinion that the finding of the Appellate Tribunal that there was no concealment of income is purely a finding of fact. The Income-tax Officer might have been justified in making the addition in the assessment of income on the basis of the revised return filed by the assessee. The assessee itself filed the revised return on the basis of settlement and the letter of the assessee dated April 6, 1973, shows that since the assessee was not able to prove conclusively that the credits were genuine, it came forward to offer credits as its income. The penalty proceeding, on the other hand, is an independent proceeding a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent itself would not be sufficient to hold that -the credits were not genuine or that the assessee had admitted that there was concealment of income. The statement of the assessee has to be read as a whole and the assessee had stated that there was no documentary evidence to prove the credits standing in the names of Sivaraman and his relatives. But, from the statement, it cannot be assumed that the assessee had admitted that it had concealed the particulars of income in the revised return. There was no acknowledgment of concealment. There is also no admission by the assessee, which can be used against it, that the credits represented its income and it had concealed the income in the original return. The burden is on the Department to prove that the assessee had concealed the particulars of income and that the amounts added represented the income of the assessee. The twin conditions must be satisfied before the levy of penalty. The Income-tax Officer has not done any further enquiry by issue of notice to the creditors or to the assessee nor has he obtained a statement from the assessee to establish that there was concealment of particulars of income by the assessee. The action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the materials on record. Therefore, we answer the three questions of law referred to us in Tax Cases Nos. 1458 and 1459 of 1986, in the affirmative and against the Revenue. In so far as Tax Cases Nos. 913 and 914 of 1986 are concerned, the assessee is a partner and the penalty was levied for non-disclosure of the share of the assessee in the amount representing the cash credits found in the books of the assessee-firm. Since we have held in the firm's case that there was no case for levy of penalty and the Appellate Tribunal has merely followed its order in the case of the firm, the cancellation of the penalty of the Appellate Assistant Commissioner as well as by the Appellate Tribunal in the assessee's case was justified and we find no error in the order of the Appellate Tribunal. Accordingly, we answer the three questions of law referred to us in Tax Cases Nos. 913 and 914 of 1986, in the affirmative and against the Revenue. Tax Case No. 921 of 1986, we have already seen, is a case arising under the Wealth-tax Act. The first question relates to the levy of penalty for not disclosing the share of the assessee in the cash credits found in the books of the assessee-f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no intention on the part of the assessee to conceal the value of the silver ware in the original return. Though the Appellate Tribunal had not discussed the nature of the silver ware, a fair reading of the order of the Tribunal shows that it was convinced with the explanation offered by the assessee and it was found to be bona fide and there was no concealment by the assessee in not returning the value of the silver ware in the original return. Though the Wealth-tax Officer as well as the Appellate Assistant Commissioner had not initiated any proceeding and levied penalty on the failure on the part of the assessee to disclose the value of the silver ware in the order of penalty, the Tribunal has recorded a finding that there was no concealment in the original return. The question whether the Tribunal has jurisdiction to record such a finding when the matter was not considered by the Wealth-tax Officer or by the Appellate Assistant Commissioner or whether the Tribunal could have exercised the powers of enhancement in respect of the matters not considered by the Wealth-tax Officer or by the Appellate Assistant Commissioner is not a matter in issue. Since the Tribunal has accep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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