TMI Blog1985 (8) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... -72, return was filed on October 4, 1971, declaring a total income of Rs. 54,726. During the assessment proceedings, the Income-tax Officer found that cash credits amounting to Rs. 65,000 was shown in the books of account in the name of four different persons and since the assessee was not able to explain the said amount, the same was added as the assessee's income from undisclosed sources. The interest which was shown to have been paid pertaining to the credits was also disallowed because the genuineness of the credit was not accepted. On the assessee's appeal, the Appellate Assistant Commissioner allowed deduction of Rs. 10,000 out of the assessment in respect of the credit shown in the name of one of the persons but confirmed the addition of Rs. 55,000 and held that the credits were not proved to be genuine. The disallowance of the interest was also confirmed. On further appeal by the assessee to the Tribunal, the Tribunal accepted the three cash credits shown in the names of Naginder Singh, Sher Singh and Kartar Singh as genuine and deleted those additions but in regard to the 4th cash credit entry in the name of Karnail Singh for the sum of Rs. 37,500, the deletion of Rs. 10,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of the assessee and merely for the falsity of the assessee's explanation, no penalty for concealment of income could be imposed. In this behalf, it relied on CIT v. Anwar Ali [1970] 76 ITR 696 (SC). It also relied on CIT v. Khoday Eswarsa and Sons [1972] 83 ITR 369 (SC), wherein it was further held that before levying penalty, the Department must have produced before itself any cogent evidence to prove that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. It also concluded that the original assessment proceedings may be a good item of evidence in penalty proceedings but penalty cannot be levied solely on the basis of the reasons given in the original order of assessment. It was finally held that the onus that lay on the Department was not discharged by it. The Tribunal then proceeded to consider whether penalty is exigible with reference to the Explanation to section 271(1)(c) of the Act. Under this Explanation, it was noticed that the onus was on the assessee. It then proceeded to observe that though in the assessment proceedings, the Explanation regarding the nature and source of the credit of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Explanation until and unless the Department is able to establish afresh that the assessee in fact had concealed the particulars of the income or furnished inaccurate particulars thereof .... In cases of concealment of income and tax evasion, the modus of concealment is obviously within the special knowledge of the assessee. Consequently, in cases of blatant evasion, the legislature was compelled to take off the impossible burden of establishing facts which are obviously in the special knowledge of the assessee alone. The onus was, therefore, rightly placed on the shoulders of the assessee, who alone could reasonably discharge the same. The insertion of the Explanation and the omission of the word 'deliberately' from clause (c) of section 271(1) was not merely declaratory of the existing law, but designed to effect a change in law. The changes were obviously brought in to remedy a particular mischief. To say that, despite the amendment, no change was brought about in the law would be rendering the whole of the provisions nugatory and would be violating the settled canon of construction that a meaning must be given to every word in a statute. The intention of the legislatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to what was the rate of interest payable to him. Finally, it was concluded on the basis of that material that the depositor was not in a position to advance the loan of Rs. 27,500 to the assessee. Merely getting the statement of the depositor recorded in the penalty proceedings or producing his affidavit did not discharge the burden which lay on the assessee to rebut the presumptions against him. It was for him to have led some cogent evidence on the basis of which it could be said that the failure of the assessee to return the correct assessed income was not due to fraud or gross or wilful neglect on his part. In this behalf no evidence whatsoever was led and, therefore, the Tribunal was wrong in concluding that the onus stood discharged. The Tribunal did not keep the correct legal principles in view and probably because at that time the decision in Vishwakarma Industries' case [1982] 135 ITR 652 (P H) [FB] had not been rendered and the matter was being decided in the light of Anwar Ali's case [1970] 76 ITR 696 (SC) and Khoday Eswarsa's case [1972] 83 ITR 369 (SC). It is true that in the last part of the Tribunal's order, reference to the Explanation added with effect from Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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