TMI Blog1979 (7) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the penalty imposed on the assessee ? " The facts are that the assessee is a registered firm dealing in cloth, hosiery and umbrellas. For the assessment year 1958-59, the assessee filed its return declaring a total income of Rs. 15,182. The assessment was completed on 31st March, 1961, on a total income of Rs. 34,475. Subsequent to the completion of the assessment, the ITO noticed that there were entries of cash credits of the aggregate amount of Rs. 7,500 in the names of different persons in the books of account of the assessee which were not properly explained. In order to bring the aforesaid amount of Rs. 7,500 to tax as the assessee's income from undisclosed sources, the assessment was reopened by the ITO under s. 147 of the Act and a notice under s. 148 was issued to the assessee calling upon it to file a return. On 28th January, 1969, the assessee filed a return in response to the notice showing a total income of Rs. 41,972. This figure was made up of the income of Rs. 34,475 as computed in the original assessment and the above cash credits of Rs. 7,500. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " Merely because the assessee itself showed the amount of Rs. 7,500 representing unexplained cash credits in the returns subsequently filed it cannot be said that the assessee either accepted the same as representing its income or accepted the same as concealed income. In the absence of any cogent material establishing that the aforesaid amount was the assessee's income, we hold that the assessee's case falls squarely within the ratio of the Supreme Court's decision given in Anwar Ali's case [1970] 76 ITR 696 (SC)." Penalty under s. 271(1)(c) is imposable when the ITO or the AAC in the course of any proceedings under the Act, is satisfied that any person " has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income ". We are not concerned with the Explanation which was added with effect from 1st April, 1964. The principles applicable to imposition of penalty before the insertion of the Explanation in s. 271 are those which were settled by the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696, a case relating to s. 28(1)(c) of the Indian I.T. Act, 1922, which corresponds to s. 27(1)(c) of the present Act. In Anwar Ali's case, whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under s. 271(1)(c) has to be decided. It may, however, be noticed that in Anwar Ali's case [1970] 76 ITR 696 (SC), there was no admission made at any stage by the assessee that the disputed amount was his income. The assessee gave an explanation during the assessment proceedings that the disputed amount represented diverse sums entrusted to him by his relatives who had got panicky during the communal riots in Bihar. This explanation was not accepted in the assessment proceedings and this was the only material relied on by the department in the penalty proceedings to prove that the assessee had concealed particulars of his income. The Supreme Court was of the view that this material by itself was not enough to bold that the disputed amount was income or that the assessee was guilty of concealing particulars of his income. In the instant case, the position on facts is materially different. In the return filed, in answer to the notice under s. 148, the assessee showed the amount of Rs. 7,500 as its income without any qualification. This return filed by the assessee constituted an unequivocal admission on its part that the amount in question was its income. It was on this evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all made by the assessee and the department had solely relied on the rejection of the explanation offered by the assessee in the assessment proceedings. In Mahavir Metal Works v. CIT [1973] 92 ITR 513 (Punj), the assessee filed a revised return during the assessment proceedings showing the dis- puted amount as its income. It was held that the moment the said admission was proved by the department during the penalty proceedings, the onus on the department was discharged and it was then for the assessee to prove that the admission made by him during the course of the assessment proceedings was wrongly or illegally made or was incorrect. The learned judges of the Punjab High Court, in so holding, made the following observations (p. 516) : " But in a case where the assessee himself, during the course of the assessment proceedings, files a revised return and owns the amount in question as his income and he also having earlier filed a return concealing the said income by deliberately furnishing inaccurate particulars of that income, the moment the said admission of the assessee is proved by the department during the course of the penalty proceedings the onus on the department is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances under which the assessee agrees that the disputed items be included in his income may differ from case to case, and this is the reason why in some of the cases the surrender of the items has been taken to be an admission and in others not. In Durga Timber Works v. CIT [1971] 79 ITR 63 (Delhi) and Western Automobiles (India) v. CIT [1978] 112 ITR 1048 (Bom), the surrender of the disputed items was held to be an admission which, when relied upon in penalty proceedings, shifted the onus to the assessee. In contrast, in Gumani Ram Siri Ram v. CIT [1972] 85 ITR 67 (Punj), M. Ramaswami Asari v. CIT [1974] 96 ITR 546 (Mad) and CIT v. Gajanand Shyamlal [1978] 111 ITR 816 (Gauhati), the surrender of the disputed items during assessment was not held to be an admission. It is not necessary for us to go into the facts and circumstances of each of these cases. All that we need say is that it cannot be held as an inflexible rule that when, after an initial dispute, the assessee agrees to have certain items included in his total income, he makes an admission that the items constitute his income. The question whether the surrender of the items constitutes an admission will depend upo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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