TMI Blog1987 (9) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... r the filing of the original return. Among the papers seized during the search was a diary in which were noted sales to various parties to the extent of Rs. 1,52,027.82. The total income of the assessee was ultimately determined at Rs. 2,59,315 up to the stage of the Tribunal. The Income-tax Officer, however, initiated penalty proceedings under section 271(1)(c) of the Act and ultimately levied a penalty of Rs. 1,04,000 under the said provision. He held that it was only when the search and seizure operations were conducted and the Income-tax Officer found that the assessee had done considerable business outside the books and he called upon the assessee by an order-sheet entry dated August 7, 1979, to explain the nature of entries in the seized papers that the assessee confronted with that situation, was forced to file a revised return. He also held that it cannot be said that the revised return was filed on account of any bona fide inadvertence or omission in the original return. Ultimately, the finding recorded by the Income-tax Officer, therefore, was that the assessee had concealed the particulars of income. The Commissioner of Income-tax (Appeals) also confirmed the penalty ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not applicable to the present case for a number of reasons. Firstly, the assessment year involved in the said case was 1957-58. Till then, the Explanation to section 271(1)(c) of the Act was not in existence at all. We shall presently refer to it as it has made a material difference in the matter of considerations which arise for the levy of penalty as well as regarding the burden of proof. The relevant Explanation to section 27 l(1)(c) of the Act as was in force on the date of the filing of the return in the year 1978 stood as follows : " Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act, (A) such person fails to offer an explanation or offers an explanation which is found by the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) to be false, or (B) such person offers an explanation which he is not able to substantiate, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussion took place with the Income-tax Officer but it cannot be said that on account of the discussion, the surrender of, the extra income of Rs. 1,52,027.82 was an induced surrender and not a voluntary disclosure. The mere fact that the assessee said that the revised return was being filed showing an extra income of Rs. 1,52,027.82 under the head " Other sources " only to purchase peace and to close litigation would not be conclusive as it was an admission made by the assessee in its own favour. The assessee stated in that letter that it was not possible to furnish documentary evidence enabling it to work out the correct profit in respect of the said sales or the nature and source of the quantum of the said investment therein. The failure to furnish documentary evidence cannot be due to one reason only ........" Thereafter, in reply to another entry in the order-sheet dated October 25, 1979, which was subsequent to the filing of the revised return, the assessee was required to furnish the basis of Rs. 1,52,027. The assessee replied to the same by his letter dated October 31, 1979. In paras 2 and 3 of this letter, it was stated that the assessee had also carried on business o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1977] 106 ITR 534 (All) and Addl. CIT v. Radhey Shyam [1980] 123 ITR 125 (All). In the case of Mansa Ram Sons [1977] 106 ITR 307 (All), we find that the assessment year involved in this case was 1951-52, i.e., long before the insertion of the Explanation to section 271 (1)(c) of the Act. In the said case, it was held that where surrender was induced by the Department not to levy penalty, no penalty ought to have been levied. In that case, the amount was surrendered as desired by the Income-tax Officer. The court held that since the Income-tax Officer had induced the assessee to surrender the cash deposit to avoid penalty, the surrender was made. At page 312 of the Income-tax Reports, it is made clear that in that case the question of the Explanation to section 27 l(1)(c) as it existed even in the year 1964 was not invoked and was also not allowed to be invoked by the High Court. The said decision is clearly distinguishable. In our case, the Tribunal has recorded findings to the contrary to the effect that the surrender was neither voluntary nor was it induced by the Income-tax Officer. On the other hand, because of the existence of the materials found concealed as a result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revised return cannot be availed of by the assessee as provided under section 139(5) of the Act. We do not see how, on the findings recorded in the case of Radhey Shyam [1980] 123 ITR 125 (All), this case runs counter to the earlier two decisions of this court cited by learned counsel for the assessee. In the case of Radhey Shyam [1980] 123 ITR 125 (All), the Tribunal had recorded a finding that non-disclosure was due to gross or wilful negligence on the part of the assessee. There is no mention in the said decision regarding the applicability of the Explanation to section 271(1)(c) of the Act. In these circumstances, we are of the view that there is no conflict between the aforesaid decisions of this court as suggested by learned counsel for the assessee. A feeble attempt has been made by learned counsel for the assessee to show that the onus has been wrongly placed by the Tribunal on the assessee. This argument has no force inasmuch as it overlooks the findings of fact recorded by the Tribunal under the proviso to clause (B) of Explanation I in question. Having regard to the said findings that the explanation offered by the assessee was not bona fide and that material rela ..... X X X X Extracts X X X X X X X X Extracts X X X X
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