TMI Blog1995 (6) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... eth and Company, Madras ; which was carrying on business as general merchants and in pharmaceuticals; (2) Rathod Trading Company, Madras ; (3) Pacoda Metal Industries and (4) C. J. Sheth and Company, Bangalore. Besides, he was also carrying on agency business and derived income by way of dividends, sitting fees, etc. He filed the return on March 31, 1965, disclosing an income of Rs. 19,487 for the assessment year 1964-65. The assessment was completed on March 12, 1969, on a total income of Rs. 1,26,511. In doing so, the Income-tax Officer made an addition of Rs. 75,000 under the head "Other sources" representing the increase in the peak of the credits appearing in the names of various multani bankers in the books of the assessee. The Income-tax Officer also disallowed Rs. 32,085 claimed to have been paid as interest by the assessee to the aforesaid multani bankers in determining the income under the head "Business". Such addition and disallowance were made on the ground that the assessee had not established the genuineness of the transactions evidenced by the credit entries in the names of the multani bankers and the entries relating to payment of interest. On appeal, the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In doing so, he brought to tax Rs. 3,30,000 being the peak of the credits standing in the names of various multani bankers in the books of the assessee and also disallowed Rs. 31,742 being the interest claimed to have been paid by the assessee to such bankers on the ground that the assessee had not established the genuineness of those transactions. He also initiated action for levy of penalty under section 271(1)(c) of the Act. Aggrieved by such assessment, the assessee preferred an appeal to the Appellate Assistant Commissioner contending that the Income-tax Officer should have accepted the version about the genuineness of the transactions evidenced by cash credit entries and the entries relating to payment of interest. It was further submitted that in any event since the peak of the credit amounted to Rs. 3,30,000 for the assessment year 1964-65 and since there was no increase in the peak for the assessment year 1965-66 nothing could be added for this assessment year. The Appellate Assistant Commissioner accepted the latter contention and directed deletion of Rs. 3,30,000 that had been added under the head "Other sources". He sustained the disallowance of Rs. 31,742 claimed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same assessee reported in CIT v. Chandrakant M. Tolia [1992] 195 ITR 593, wherein on similar facts relating to the assessment years 1962-63 and 1963-64, this court held that no penalty can be levied under section 271(1)(c) of the Act in respect of the cash credits found relating to the multani bankers. Learned standing counsel pointed out that the decision in CIT v. Chandrakant M. Tolia [1992] 195 ITR 593 (Mad) is distinguishable on facts. According to learned standing counsel, in the present case, the assessee undertook to summon the witnesses in order to prove the genuineness of the cash credits but there was no response from the assessee after the notice was issued by the Inspecting Assistant Commissioner. According to the facts arising in Chandrakant M. Tolia's case [1992] 195 ITR 593 (Mad), the assessee did not undertake to summon the multani bankers in order to prove the genuineness of the cash credits standing in the name of the multani bankers. Therefore, according to learned standing counsel, inasmuch as the assessee has furnished inaccurate particulars in the present assessment years under consideration penalty under section 271(1)(c) is exigible. On the other han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh credit in the assessment proceedings is different from the standard of proof required for establishing whether there is any wilful negligence or fraud on the part of the assessee in furnishing inaccurate particulars. Similarly because in the assessment proceedings the cash credits were added as income since the assessee failed to prove the genuineness of such credits and on the same basis it is not possible to say that the assessee has furnished inaccurate particulars wilfully in the penalty proceedings. These transactions were going on for the past twelve years prior to the assessment years under consideration and hence the assessee cannot be asked to produce evidence to show that the amounts borrowed from the multani bankers are genuine transactions. In fact, the assessee has produced the discharged hundis which contains the names and addresses of the persons from whom the amounts were borrowed. The assessee has also produced the account books where entries were made with regard to the amounts borrowed from the multani bankers. When so much particulars were furnished before the Income-tax Officer, it cannot be said that there is any concealment of income as contemplated under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal was not correct in cancelling the penalty levied under section 271(1)(c) of the Act. According to the facts arising in the abovesaid decision, the assessee filed his return for the assessment year 1971-72 disclosing the loss. The explanation offered by the assessee for credits totalling Rs. 27,000 in his accounts was not accepted by the Income-tax Officer. Therefore, this amount was added as income. Thereafter, penalty proceedings were initiated under section 271(1)(c) of the Act. It is in that case, the assessee has not disclosed the cash credits of Rs. 27,000 in the original return filed. Hence, the question arose whether the assessee has concealed the income. But, according to the fact arising in the present case from the earlier assessment years, the assessee was consistently showing the amounts borrowed from multani bankers and the interest paid to them. Since the Income-tax Officer doubted the genuineness of the borrowals, he reopened the assessment under section 147 of the Act. Therefore, in the present case there is no question of any concealment of any particulars as stated under section 271(1)(c) of the Act. Therefore, this decision would not render any assistan ..... 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