TMI Blog1998 (7) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances of the case, is not the order of the Tribunal vitiated for not considering the case in the light of Explanation 1 to section 271(1)(c) ?" For these assessment years, certain additions were made by the Assessing Officer on the basis of the materials seized on January 29, 1982, when a search under section 132 of the Act was carried out at the residence of the assessee. The additions finally upheld by the Appellate Tribunal are as follows : "Assessment years 1979-80 1980-81 Rs. Rs. Income from toddy business in Alwaye range 2,27,609 1,00,822 Income from benami business in the name of 20,580 1,38,348 Archana Jewellery Share income of minor children from Shilpi Movies 13,333 13,333." The facts as briefly stated are that during the search operation on January 29, 1982, documents marked as items Nos. 20/29 to 20/34 were seized. These documents purported to have related to toddy business in Alwaye range for the consecutive accounting years 1977-78 to 1979-80. Item No. 20/29 revealed the following entries : Rs. 1977-78 a/c Profit 1,98,694.87 1978-79 a/c Profit 4,55,219.29 1979-80 a/c Profit 2,01,643.58 ----------------------- Total 8,55,557.74 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, in view of section 64(1)(iii) of the Act held that the assessee was under legal obligation to disclose the minors' income. Income of the firm was estimated at Rs. 24,000 for the assessment year 1979-80. 5/9ths share of the minors was taken at Rs. 13,333 and the same was included in the assessee's income. For the assessment year 1980-81 also, the same income was assessed and the same share income of the minors was included in the assessee's hands. The Assessing Officer while making the assessments also initiated penalty proceedings for concealment under section 271(1)(c) of the Act and found that the incomes from toddy business, from Archana Jewellery and from Shilpi Movies represented concealed income of the assessee. Penalty was accordingly levied. As already pointed out, the additions in respect of such incomes were upheld by the Appellate Tribunal in second appeal. The submission of learned senior standing counsel is that Explanation 1 to section 271(1)(c) of the Act is applicable and that the explanation given by the assessee being false and not being substantiated by the assessee, the presumption would be that the additions upheld by the Appellate Tribunal, represente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no connection with the business. The abkari business, no doubt, cannot be carried on by any one without a valid licence. Since the place of business was clear from the documents seized and since the seized documents revealed the names of K. S. Chathunny, K. S. Ramakrishnan and K. P. Sreedharan whose names were found in the balance-sheet, it was for the Revenue to make enquiry from the Excise Department as to whom the licence to carry on the toddy business was granted during the relevant years and also some enquiry should have been made from the persons, whose names appeared in the balance-sheet. It has come on the record that the assessee participated in the excise auction only on March 6, 1980, that is, during the accounting year 1980-81, relevant to the assessment year 1981-82. The Tribunal observed that "the certificate now produced before us also indicated that K. S. Chathunny, K. S. Ramakrishnan and K. P. Sreedharan were the persons who had taken the auction in the impugned years". They were not examined, though their names appeared in the balance-sheet (item No. 20/31). Under Explanation 1, the Revenue could prima facie presume that the toddy business in respect of which docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Achari who carried on business of Archana Jewellery, desired to take the premises of Ramesh---a neighbour of the assessee---on rent and that since the latter wavered in relying on the former, the good offices of the assessee was utilised. The assessee contended that he being a neighbour intervened in the matter and got the lease-agreement settled. Sathyan, the nephew of the assessee, was not examined by the Revenue. The Tribunal held that no adverse inference could be drawn simply on account of the monetary transactions, the assessee, admittedly, had with Chellappan Achari. The Tribunal took note of the fact that Chellappan Achari was assessed in respect of Archana Jewellery business and, therefore, the Revenue could not turn around now and say that Chellappan Achari was benamidar of the assessee. The licence to run the jewellery business was in the name of Chellappan Achari. No account books relating to this business were seized from the house of the assessee. On these facts, the Tribunal was right that the explanation of the assessee could not be said to be false or mala fide. Nor could it be said that the assessee failed to substantiate his explanation. The Tribunal clearly he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer and sustained by the appellate authorities, will represent the concealed income of the assessee, provided no explanation is furnished or the explanation furnished is found to be false or the assessee is not able to substantiate the explanation or the explanation is not bona fide. It is not a case of "no explanation"; also it is not a case where the explanation filed by the assessee, can be said to be false nor has it been so established by the Revenue. The explanation furnished is not per se mala fide or untenable. On these facts, no penalty can be sustained simply on the strength of Explanation 1. No doubt, the Appellate Tribunal has not referred to Explanation 1 to section 271(1)(c) in this case. But considering the explanation of the assessee and the facts and circumstances of the case in its entirety, the Tribunal was of the view that the presumption initially available to the Revenue, was successfully rebutted. It is vehemently argued before us for the Revenue that the Tribunal wrongly placed the burden of proof on the Revenue and hence the common order is vitiated. The order of the Tribunal has to be seen in entirety and not in a truncated fashion. The Tribunal di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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