TMI Blog1980 (8) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment year 1960-61 there were cash deposits of Rs. 7,000, Rs. 5,000, Rs. 10,000, Rs. 3,000, Rs. 1,000, Rs. 2,000 and Rs. 2,500 in the names of Deepchand Surana Nouratmal Surana, Mahalchand Ghorawar, Promode Ranjan Ghose, Banwarilal Jain, Sudhir Chandra Saha and Smt. Mohini Devi Choraria, respectively. Sri Deepchand Surana, who was examined by the ITO, claimed to have deposited the amount out of his past savings made in Pakistan out of his salary income of Rs. 300 per month. Having regard to the lack of evidence for the remittance of the money, and the fact that be was being unemployed for more than 18 months and having regard to the size of his family, the I.T. authorities were not satisfied with his explanation regarding the sources of the amount. Sri Nouratmal Surana was not produced before the ITO. Sri Mahalchand Ghorawar, who was examined by the ITO, claimed to have made advances out of his savings. He was found to be an employee of the assessee drawing a petty salary. Here, in this case also, having regard to the size of his family and in the absence of proof of his claim regarding the sources of the amount, his explanation was also disbelieved. Sri Ghorawar was ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn money in the earlier assessments. The amounts being treated as concealed income, the IAC imposed a penalty of Rs. 11,100. Being dissatisfied and aggrieved, the assessee came in appeal before the Tribunal. The orders of penalty were challenged on the ground that the additions had been made by way of an estimate in the trading account or in respect of cash credits taken to be the assessee's income for the purpose of assessments. According to the department, the accounts of the assessee revealed a regular modus operandi, suppressing income by way of remittances year after year, and, according to the facts of the case, precluded the application of the authorities cited on behalf of the assessee, viz., the decision of Anwar Ali's case [1970] 76 ITR 696 (SC). On hearing the submissions of both sides, the Tribunal upheld the assessee's contention on the ground that the department was not satisfied with the explanation offered regarding the nature and source of the cash credit which led it to make the additions and moreover, as regards the remittances found in the accounts or in the documents seized from the assessee's premises, the additions were made as a result of the unsatisfact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st day of April, 1962, may be initiated and any such penalty may be imposed under this Act." But s. 271(1) of the Act refers to any proceeding under the Act of 1961. There is no dispute that the assessment proceedings for the years 1960-61 and 1961-62, were completed u/s. 23(3) of the Indian I.T. Act, 1922, and the penalty proceedings were completed for these two years on February 28, 1967, and March 15, 1968, respectively. According to Mr. Pal, on the basis of the decision in the case of jain Brothers [1970] 77 ITR 107 (SC), the penalty proceedings for these two years could very well be disposed of under the provisions of the Act of 1961. It was found by the Supreme Court in that case that for the imposition of penalty it was not the assessment year or the date of filing of the return which was important but it was the satisfaction of the I.T. authorities that a default had been committed by the assessee which would attract the provisions relating to penalty. Whatever the stage at which the satisfaction was reached, the scheme under ss. 274(1) and 275 of the Act of 1961 was that the order imposing penalty must be made after the completion of the assessment. The crucial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Act of 1922 is attracted if an assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income. Such is also the provision in s. 271(1)(c) of the Act of 1961. The word " deliberately " was deleted in that section with effect from 1st April, 1964. As s. 28 of the Indian I.T. Act, 1922, is in pari materia with s. 271(1)(c) of the 1961 Act, the principles enunciated in both the cases referred to above are practically the same. The gist of the offence rests on the allegations that the assessee had concealed the particulars of the income or deliberately furnished inaccurate particulars of such income by a subsequent amendment, if there was a difference between the returned income and the income subsequently assessed was found to be of a certain percentage, the onus lay on the assessee to prove that such failure was not deliberate and the burden was on the assessee to establish it, then the receipt of the income in question constituted the income of the assessee. If there was no evidence on record except the explanation given by the assessee, which again had been found to be false, it did not follow that the receipt constituted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or did never exist. As far as the items of Rs. 40,000 and Rs. 52,000 were concerned, the evidence relating to the latter sum, according to him, clearly established that the assessee was having transactions outside its regular books of account and that the amount utilised had not come from its known capital and as such the said sum represented its unaccounted income. The basis for such addition was the documents and accounts seized by the Enforcement Directorate. As for the year 1961-62, it was found that the cash credit of Rs. 2,000 in the name of Shri M. Ghorawar had actually come out of the concealed income of Rs. 50,000 being unexplained cash shown as remittance between the head office and Agartala branch, and Rs. 43,000 unexplained cash shown as remittance between the head office and Dhubri branch, and the other items were similarly disbelieved to be genuine. As to the year 1962-63, the books of account of the head office with reference to the books of Dhubri branch were scrutinised. It was found that there were total remittances of Rs. 1,60,000 from head office to the Dhubri branch and the entries in the accounts of both the places were made on identical dates. The sum of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the Supreme Court that any finding in the assessment order may constitute good evidence in the penalty proceeding, but that finding cannot be regarded as conclusive for the purpose of the penalty proceedings. In this context, it was obligatory on the part of the department to establish that the disputed amount constituted the income of the assessee in the previous accounting year. There was no such finding, though it was pressed by the assessee. It is emphasized by the Supreme Court in the case, Anantharam Veerasinghaiah Co. v. CIT [1980] 123 ITR 457, at p. 463 of the report, that it is a matter for consideration by the taxing authority in each case whether the unexplained cash deficits and the cash credits can be reasonably attributed to a pre-existing fund of concealed profits or they are reasonably explained by reference to concealed income earned in that very year" (Underlining is ours). In the above premises, we propose to hold, in agreement with the Tribunal, that the provision in s. 68 of the Act is confined to the assessment proceeding and cannot be extended to the penalty proceeding as well. Mr. Deb also asks us not to answer the questions referred to us, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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