TMI Blog1989 (1) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... e satisfactory or acceptable evidence in support of the genuineness of the credits, the Income-tax Officer completed the assessment on a total income of Rs. 32,460 by adding the amounts represented by the credit entries as income from other sources. Consequent upon the completion of the assessment in the manner aforesaid and in view of the introduction of the Explanation to section 271(1)(c) of the Act by the Finance Act, 1964, penalty proceedings under section 271(1)(c) of the Act were also initiated. The assessee preferred a revision petition before the Commissioner of Income-tax under section 264 of the Act and before him, the assessee purported to produce three confirmatory letters stated to have been given by the creditors who had advanced amounts to the assessee. The Commissioner of Income-tax directed the Income-tax Officer to examine those letters and delete the cash credits against their names, if the Income-tax Officer was satisfied about the evidence produced before him. However, the Income-tax Officer found the letters to be unsatisfactory and unacceptable and concluded the assessment on that footing. In response to the show-cause notice issued in the penalty proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee's guilt of concealment of income. Learned counsel further submitted that in view of the Explanation, those decisions cannot have any application at all and that the Tribunal had also, without any materials in support thereof, come to the conclusion that the assessee had discharged the onus placed on him under the Explanation. Reliance in support of these contentions was placed on the decisions reported in Addl. CIT v. Lakshmi Industries and Cold Storage Co. Ltd.. [1984] 146 ITR 492 (All), CIT v. Nathulal Agarwala and Sons [1985] 153 ITR 292 (Pat) [FB], CIT v. Chickanna Silk House [1987] 163 ITR 145 (Mad), CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14 (SC) and Chuharmal v. CIT [1988] 172 ITR 250 (SC). Per contra, learned counsel for the assessee submitted that the Tribunal had considered all the available materials and had come to the conclusion that the levy of penalty on the assessee was not justified and, therefore, there is no justification for disturbing that order as prayed for by the Revenue. Reliance was placed upon the observations in the decision of the Supreme Court reported in CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14. In reply thereto, learned counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the income of the assessee as assessed is the correct income and in fact is that of the assessee himself and the failure on the part of the assessee to return the correct assessed income was due to fraud or gross or wilful neglect on his part. No doubt, this could be rebutted by the assessee by establishing that the failure to return the correct income was not owing to fraud or gross or wilful neglect on his part. In this case, it has already been seen that in the course of the penalty proceedings, the assessee had no explanation whatever to offer. Apart from merely praying for some adjournments which were granted, the assessee had not made any attempt to establish that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. Prima facie, therefore, the assessee had not attempted to dislodge the presumptions arising as a result of the application of the Explanation on the facts of this case. In other words, the presumption raised under the Explanation had remained totally unrebutted and in such an event, there was absolutely no justification whatever for the deletion of the penalty levied on the assessee by the Tribunal, The Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons given in the original order of assessment. The latter part of this observation of the Supreme Court is understandable, for, as the provisions then stood, the burden was on the Department to establish that a particular amount was a revenue receipt. We thus find that the two decisions relied on by the Tribunal have no application at all to the present case. We, therefore, hold that the Tribunal totally misdirected itself in proceeding to consider the case in the light of the decisions in CIT v. Anwar Ali [1970] 76 ITR 696 (SC) and CIT v. Khoday Eswarsa and Sons [1972] 83 ITR 369 (SC) which did not at all deal with section 271(1)(c) of the Act as well as the Explanation added by the Finance Act, 1964. The observation of the Tribunal that the Department has not brought home the guilt of concealment of income by the assessee cannot therefore, be stated to reflect a correct approach in the light of the provisions of section 271(1)(c) of the Act read with the Explanation in considering the question of levy of penalty. We may now make a brief reference to the decisions cited at the Bar. In Addl. CIT v. Lakshmi Industries and Cold Storage Co. Ltd. [1984] 146 ITR 492 (All), it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Explanation cannot come into play and only when that is fulfilled, the case squarely falls within the ambit of the Explanation and, therefore, the distinction between assessment and penalty proceedings must be kept distinct and independent of each other. Viewed in the light of the principles laid down in this decision, on the facts of this case, it is at once apparent that though, in the course of the assessment proceedings, the assessee attempted to offer some explanation which was eventually not accepted, there was absolutely no explanation in the course of the penalty proceedings and if the two proceedings are kept distinct and separate, it follows that the assessee did not even make any attempt to discharge the burden laid on him in view of the Explanation referred to already. Again, in CIT v. Chickanna Silk House [1987] 163 ITR 145, referring to the Explanation a Division Bench of this court, to which one of us was a party, had pointed out that a presumption is raised that the assessee had concealed particulars of his income or furnished inaccurate particulars of such income and such a presumption would be rebutted only in the event of the assessee establishing that the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion the assessee was not guilty, such conclusion does not raise any question of law. In this connection, it has to be pointed out that in this case, there is absolutely no explanation whatever offered by the assessee in the course of the penalty proceedings. There was no other material also on the basis of which it can be held that the assessee had discharged the presumption arising under the Explanation that he is guilty of concealment and that such concealment arose due to gross or wilful neglect on his part. This decision also supports the interpretation to be put upon the Explanation to section 271(1)(c) of the Act in the manner contended for by the Revenue. Again, the Supreme Court in Chuharmal v. CIT [1988] 172 ITR 250 (SC), held that where the assessee had shown a total income of Rs. 3,113 and the value of the wrist watches seized by the raiding party in sum of Rs. 87,455 was added to the assessed income of the assessee, the Explanation applied, as the income returned was less than eighty per cent. of the assessed income and the Revenue had discharged the onus of proving concealment of income. In view of the decisions referred to already, it follows that the assessee will h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out that the High Court and the Supreme Court have always the jurisdiction to interfere with the findings of the Appellate Tribunal if it appears that either the Tribunal has misunderstood the statutory language, because the proper construction of the statutory language is a matter of law, or it has arrived at a finding based on no evidence or where the finding is inconsistent with the evidence or contradictory of it, or it has acted on material partly relevant and partly irrelevant or where the Tribunal draws upon its own imagination and imports facts and circumstances not apparent from the record or bases its conclusions on mere conjectures or surmises or where no person judicially acting and properly instructed as to the relevant law could have come to the determination reached and that in all such cases, the findings arrived at are vitiated. On the facts of these cases, it is seen that the Tribunal has not only misdirected itself in law, but also has arrived at a finding that the assessee had discharged the burden on no evidence, and had drawn upon its imagination in arriving at such a conclusion and such conclusion so arrived at merely proceeded upon conjectures and surmi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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