TMI Blog1996 (2) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... e particulars thereof for the assessment year 1970-71 within the meaning of section 271(1)(c) ? " The assessment year involved in this tax case is 1970-71. The assessee is an individual doing money-lending business. One Shri Abdul Gafoor Khan had executed a general power of attorney to the assessee. There was a search in the premises of the assessee on July 27, 1970. Various pro notes standing in the name of the assessee as well as Abdul Gafoor Khan were seized. On October 3, 1970, the assessee filed a return admitting an income of Rs. 10,000. The Income-tax Officer examined some of the debtors and elicited that the assessee was charging exorbitant interest ranging from 72 per cent. to 120 per cent. The assessee was also given an opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consideration before fixing the income." The Income-tax Officer had also initiated penalty proceedings and referred the matter to the Inspecting Assistant Commissioner for adjudication. On September 11, 1974, the assessee sent a letter to the Inspecting Assistant Commissioner stating among other things that the assessment order had not been served on the assessee. The Inspecting Assistant Commissioner found that on March 29, 1973, the Inspector of Income-tax had served the assessment order on one Shri A. Jani Khan. The Inspecting Assistant Commissioner seems to have thought that it is proper service on the assessee. Even the penalty notice served on the said Shri A. Jani Khan was responded to by the assessee. The Inspecting Assistant Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he petition filed by the assessee and confirming the order passed by the Income-tax Officer dated October 16, 1970. According to learned senior standing counsel appearing for the Department, in spite of the fact that a search operation was conducted on July 27, 1970, the assessee did not come forward to file a return on the materials available on record. The assessee filed his return on August 3, 1970, admitting an income of Rs. 10,000 without disclosing the basis for such admission. The assessee filed his return only after the search was conducted and after the materials were seized. The assessee did not voluntarily file any return. According to learned senior standing counsel there was no material on record for the Tribunal to come to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of Abdul Gafoor Khan in his hands provided the Department spread over the income for the assessment years 1964-65 to 1971-72 estimating the interest between 25 per cent. to 36 per cent. allowing the assessee to pay the taxes in instalments, no penalty and prosecution proceedings should be initiated, evidences adduced for credits, should be accepted and the credits should be allowed and the bad debts should also be taken into consideration. The Income-tax Officer on the basis of the materials seized, worked out the peak credit of the loan at Rs. 1,27,385 and estimated interest income at 50 per cent. of the peak credit at Rs. 63,693 and thus made the assessment on a total income of Rs. 63,693 under section 144 of the Act. The assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not separately estimate the interest income earned by the assessee and interest income earned on the pro notes standing in the name of Abdul Gafoor Khan ; (c) The assessee had agreed for inclusion of the interest income from the pro notes taken in the name of Sri Abdul Gafoor Khan on condition that no penalty proceedings were initiated against him ; (d) Since the penalty proceedings have been initiated the conditional admission made cannot be relied on to establish the penalty proceedings that the interest earning on the pro notes taken in the name of Sri Abdul Gafoor Khan represents the concealed income of the assessee ; (e) It is not clear how the peak credit was worked out to Rs. 1,27,385 when admittedly bonds have been taken fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharged. The sufficiency or otherwise of the material found in the record for the Tribunal to come to the abovesaid conclusion is not the concern of this court while disposing of the tax case on reference. When once the Tribunal comes to the conclusion that the failure to return the correct income did not arise from any fraud or gross or wilful negligence on the part of the assessee, the quantum of proof necessary to come to that conclusion is not within the approach of this court, while considering whether the Tribunal has got sufficient materials to hold that there is no concealment on the part of assessee. Since we cannot go into the question of sufficiency or otherwise of the materials on which the Tribunal based its conclusion, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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