9911796707
TMI Blog1981 (4) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... number of cash deposit accounts. Some of those cash deposit accounts were said to be on account of loans taken on hundis in respect of which a disclosure petition was filed before the Commissioner. There were, however, a number of other cash deposits also. The ITO added to the total income disclosed by the assessee Rs. 42,500 on account of peak of the loan accounts which were covered by the disclosure petition filed before the Commissioner. Besides, he made additions totalling Rs. 35,700 on account of cash deposits, regarding the nature and source of which no satisfactory explanation had been given. It may not be inappropriate to set out the relevant portion of the order of the ITO, which reads as follows: " Other sources.-There are several credits in the names of bogus parties and also credits in the names of partners which have been disclosed by the assessee under s. 271(4A). Pending settlement of the disclosure petition these disclosed income (sic). Rs. The credits on the basis of peak comes to 42,500 Further credits in the partners a/c. 4,000 ----------------- 46 500 ----------------- Other loans.--There are a few other credits in the name of different parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmons to the various hundi lenders but merely added the same on the basis of disclosure made to the Commissioner. There was no evidence to show that any summons was issued to the alleged hundi lenders. Therefore, this statement must be accepted to be correct. According to the explanation given by the assessee before the IAC the assessee had made the disclosure on the understanding that there would be no penalty. He made the disclosure, the assessee stated, because of difficulties in producing the creditors who had taken advantage of the peculiar situation created by the surrender of a number of hundi bankers to the Commissioner. It was argued that no penalty proceeding was justified in those circumstances. The IAC, however, did not see any merit in this contention in view of, the disclosure petition; he, therefore, imposed the penalty as indicated before. In this connection it would be appropriate, in our opinion, to refer to a copy of the disclosure petition upon which reliance was placed. In the disclosure petition under s. 271(4A) it was stated as follows: " 1. That assessment for the year 1960-61 had been duly completed. In that year certain cash credits appear in the books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Appellate Tribunal referred to the relevant contentions and to the principles enunciated by the Supreme Court in the case of CIT v. Anwar Ali [1970] 76 ITR 696, and observed in its order as follows: " Having considered the submissions, in our opinion, the contention of the appellant is entitled to be accepted. The addition in respect of hundi loans was made merely on the basis that a petition under s. 271(4A) had been filed and it was pending. That petition, however, was rejected. The averments in that petition are clear that as the creditors were not willing to come forward to give evidence, it was in a fix and, therefore, the peak of the amounts was being offered for taxation so that penalty may be exempted. It had been pointed out therein that such credits had been accepted in 1960-61 and some of the parties were common in the subsequent years. It is seen that in regard to the other credits confirmation from the parties was available but merely on the ground that the evidence in regard to their resources was not sufficient, the addition came to be made. The difference between the income as returned and that determined has arisen due to the circumstance that the credits which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginally introduced which did not make much material difference. But with effect from lst April, 1964, an Explanation to s. 27l(1)(c) had been introduced to the effect that where the difference between the assessed income and the income disclosed is more than 80%, as is in the instant case, then the onus was on the assessee to prove that the failure to return the correct income or to furnish the particulars of the income was not due to the gross or wilful default on the part of the assessee. Therefore, keeping these legal principles in mind, the facts in this case will have to be decided. Numerous decisions were cited from the bar in aid of the respective contentions. But most of them, in our opinion, are not relevant to be discussed in detail, because these depended on the peculiar facts of those cases. We have to bear in mind the warning of the very high authority that it is dangerous to try to match the colour of one case with the decisions in other cases. It is difficult sometimes to evolve the correct principles. In any case, as the decisions had been cited, we will, however, have to refer to them. Our attention was drawn to a Bench decision in the case of CIT v. P. B. Shah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal did not consider whether fraud, gross or wilful neglect was established by drawing the correct principle and that case was remanded to the Tribunal for its decision on merits. Learned Advocate for the assessee drew our attention to a decision of the Supreme Court in the case of CIT v. Anwar, Ali [1970] 76 ITR 696 and to the decision of the Kerala High Court in the case of CIT v. Mohammed Kunhi [1973] 87 ITR 189, which unfortunately is a decision before the introduction of the Explanation. Our attention was also drawn to a decision of the Supreme Court in the case of CIT v. Khoday Eswarsa and Sons [1972] 83 ITR 369, which dealt with s. 28(1)(c) of the Indian I.T Act, 1922, without the help of the Explanation to s. 271(1)(c) of the I.T Act, 1961. Similarly, the learned advocate for the assessee drew our attention to the decision of the Punjab and Haryana High Court in the case of Gumani Ram Siri Ram v. CIT [1972] 85 ITR 67, which merely reiterated the principles of the decision of the Supreme Court in Anwar Ali's case without, however, if we may point out respectfully, taking into consideration the consequences of the introduction of the Explanation with effect from 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This presumption would, of course, be a rebuttable presumption and it would be open to such person to establish that despite there being a difference of more than twenty per cent. between the income returned and the income assessed (such difference having been arrived at in the manner indicated in the first part of the Explanation), the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. It is only if he fails to discharge the burden of displacing the presumption in the manner aforesaid on the basis of preponderance of probabilities by leading evidence or by relying on the material which is already on record that the penalty under s. 271(1)(c) for concealment of income would be attracted. Under s. 277, a false statement in any verification under the Act or any rule made thereunder, which the person verifying knows or believes to be false, or does not believe to be true, is made punishable. Ordinarily a person, who has to furnish a return of income under such statutory requirements and face such statutory consequences in case the information furnished in the return is found to be false, is expected to be, and in all probabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be reduced as provided in the Explanation, the ingredients of concealment within the meaning of s. 271(1)(c) are not in any manner affected. This provision, in fact, is beneficial to the assessee, because it leaves a larger margin than what would have been the effective margin, had no provision for such reduction been made. This requirement in the first part of the Explanation cannot, therefore, be held to be affecting the content or structure of the penal default prescribed in s. 271(1)(c). Concealment for the purposes of s. 271(l)(c) must be conscious concealment. The Explanation, in so far as it is relevant, provides that unless the assessee proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, he should be deemed to have concealed the particulars of his income. Fraud would obviously be a case of conscious concealment. So also would be a case of wilful neglect because neglect of that type would result from a deliberate act on the part of the assessee resulting in escapement or avoidance of tax and conscious concealment might ordinarily be inferred in such a case. Even for the purpose of the definitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o implement the legislative policy which was felt necessary to ensure implementation of these provisions. But the fundamental question is that it is also not necessary, in our opinion, to lay down any positive rule which is applicable to all cases, whether the evidence to be adduced by the assessee should be of a positive nature or of negative nature; nor is it theoretically possible or desirable, in our opinion, to lay down any abstract proposition that the nature of the evidence to prove a negative fact would be less than the nature of the evidence to prove a positive fact. In these matters it is, in our opinion, appropriate to decide each question on the facts and circumstances of the case bearing in mind the basic principles and these are that the evidence in the assessment proceedings are not by themselves conclusive. The circumstances under which the fact that certain sums added as the income of the assessee in the assessment proceeding do not ipso facto make the same income of the assessee in the penalty proceedings but the circumstances under which such assessment has come to be made and the nature of the evidence produced in the assessment proceedings, are materials and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd we have set out those observations hereinbefore. It would appear therefrom that the Tribunal has expressed the view after taking into consideration the fact that the three cheques were paid on account of interest. What would be the effect of that observation of the Tribunal, the Tribunal has not elaborated. But the Tribunal concluded : Therefore, the assessee must succeed on the facts because the department had failed to prove that the amount of Rs. 26,000 and the interest thereon was assessable income of the assessee which it had failed to disclose. The Tribunal, it appears, was basing its conclusion not only on the view it had taken on the theory of onus but also on the basis of its finding of facts. There is no question challenging this finding, which the Tribunal records as perverse. Therefore, though the Tribunal was not correct on its interpretation of law, as it had based its findings on facts also which have not been challenged, the conclusion that the department has failed to prove the concealment of the sums mentioned in question No. 1 cannot be assailed or altered. We answer question No. 1 accordingly. " In the light of the aforesaid decision, we have to analyse the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
