TMI Blog1980 (12) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal is right in law in finding that there is no fraud or wilful neglect or gross neglect on the part of the assessee for the application of the Explanation under section 271(1)(c) of the Income-tax Act, 1961, and is not the said finding perverse and unreasonable ? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in giving too much emphasis to the mode of encashments of the cheques in question and in finding that if the bank accounts of the assessee do not show the receipts of the cheques amounting to Rs. 1,17,633 then the assessee might have been only guilty of negligence and not gross negligence for the purpose of the Explanation to section 271(1)(c) of the Income-tax Act, 1961, and is not such finding perverse and unreasonable ? 4. If the answer to question No. 3 above is in favour of the department, whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in sending back the case to the Appellate Assistant Commissioner to find out how the cheques were encashed by the assessee and what documents were available with him which could reflect the encash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude in the original return the amounts received from the Executive Engineer, Irrigation Division, Calicut. The ITO was not satisfied with the aforesaid explanation furnished by the assessee. He held that in omitting to disclose receipts amounting to Rs. 1, 17,796 there had been a concealment of income by the assessee and the filing of a revised return after the assessee had been confronted by the ITO with the information in his possession relating to the assessee having received the amount of Rs. 1,17,633 from the Executive Engineer, Irrigation Division, Calicut, cannot absolve the assessee of guilt. The assessing authority also held that the plea put forward by the assessee that he had noted the payment received from the Executive Engineer, Calicut, on a sheet of paper and, it was on account of the fact that the said paper had been misplaced that the said receipt had not been included in the original return filed by him was not substantiated. Accordingly, the ITO held that the assessee was guilty of concealment of income under s. 271(1)(c) and levied a penalty of Rs. 15,000. The assessee took up the matter in appeal before the AAC. Strangely, the AAC merely set out the argumen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... felt that further evidence relating to the actual manner in which the cheques received by the assessee from the Executive Engineer, Irrigation Division, Calicut, had been encashed was necessary for a satisfactory determination of the question of applicability of the Explanation and hence it set aside the order of the AAC for fresh consideration and disposal in the light of the findings and observations contained in the Tribunal's order. The first question referred to us concerns the legality and correctness of the view taken by the Tribunal that a case for the levy of penalty under the main provisions of s. 271(1)(c) had not been made out against the assessee. Counsel appearing on behalf of the revenue strongly urged before us that the fact that the assessee had not been maintaining accounts and that assessments against him had been made on estimate basis during the previous years as also the further fact relied on by the Tribunal that the assessee had not been subjected to any levy of penalty during any of the previous years are totally irrelevant for the purpose of determining whether there has been a concealment of income by the assessee during the assessment year with which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the plea put forward by the assessee that he was not maintaining accounts and that the sheet of paper in which he had noted down the figures relating to the contract entered into with the Executive Engineer, Calicut, had been misplaced and that it was as a consequence thereof that the said amount was omitted to be included in the original return and it was a bona fide mistake committed by him could not be accepted as valid or true. It was on the basis of the said finding that the ITO imposed on the assessee penalty of Rs. 15,000 finding the assessee guilty of concealment under s. 271(1). We have already adverted to the reasons stated by the Tribunal for holding that a case had not been made out for the levy of penalty against the assessee under the main provisions of s. 271 (1)(c). In our opinion, none of the reasons stated by the Tribunal can be regarded as valid or sound in law. The first ground stated by the Tribunal is that the conduct of the assessee shows that no books of account had been maintained by him " all these years " and that the assessments have been made on estimate basis on the total receipts. It is further stated that " the receipts in the earlier years ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overy by the assessee of any omission or wrong statement having been made by him by inadvertence in the original return. We are supported in this view by the decision of the Assam High Court in F. C. Agarwal v. CIT [1976] 102 ITR 408 and of the Madras High Court in CIT v. J. K. A. Subramania Chettiar [1977] 110 ITR 602 with which we are in respectful agreement. In the light of the foregoing discussion, we hold that the view taken by the ITO that the assessee was guilty of concealment of income under s. 271(1)(c) of the Act and was, therefore, liable to be subjected to penalty under the said provision was perfectly correct in law and that the interference with the order of the ITO by the AAC and by the Tribunal was illegal and unwarranted. Accordingly, we answer question No. 1 in the negative, that is, against the assessee and in favour of the department. In the light of the conclusion recorded by us on question No. 1, it is unnecessary for us to consider questions Nos. 2 and 4 and, accordingly, we decline to answer those questions. The parties will bear their retrospective costs. A copy of this judgment under the seal of the court and the signature of the Registrar will be fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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