9911796707
TMI Blog1976 (12) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... 90,000, which, according to the Income-tax Officer, represented concealed income. When these hundi loans were considered in the assessment, the assessee-firm agreed to the addition of the aforesaid amount, viz., Rs. 90,000, as its business income of that year. The assessment was then completed on 26th December, 1963, on that footing. In the order itself there is an indication of contemplated penalty proceedings, which were then initiated by a notice dated 14th October, 1964. Since the minimum penalty leviable exceeded Rs. 1,000, the Income-tax Officer referred the matter to the Inspecting Assistant Commissioner under section 274(2). The Inspecting Assistant Commissioner then issued another notice under section 274(l) of the Income-tax Act, 1961, to the assessee-firm. In response to this notice, the assessee-firm filed a letter dated 21st October, 1964, submitting that the penalty proceedings were required to be terminated. The representative of the assessee then appealed before the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner it was contended on behalf of the assessee that no penalty could be levied because there was an agreement between the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port the findings that the applicant had concealed the particulars of its income or deliberately furnished inaccurate particulars thereof so as to attract the penal provisions of the Income-tax Act, 1961 ? " To a considerable extent the question sought to be raised would be an aspect of the argument which could be advanced as regards the question actually submitted to us and arguments in that behalf were in fact advanced before us and which are required to be considered by us. Accordingly, we are of the opinion that the Tribunal was not in any error in refusing to refer the question sought by the assessee and accordingly the notice of motion will stand dismissed with costs. This brings us to the consideration of the question referred to us. It is found from the assessment order that the addition of Rs. 90,000 has been made by the Income-tax Officer as the assessee's concealed income from business (and not as income from undisclosed sources). It has also been observed by the Tribunal that this addition in the assessment was by consent. It was further observed by the Tribunal that by reason of such consent to the addition the assessee had prevented the Income-tax Officer from maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28(1)(c) of the Act of 1922 for concealment of particulars of his income. The Income-tax Tribunal quashed the penalty on the ground that the onus lay on the department to show by adequate evidence that the assessee had concealed this income and that the onus was not discharged by showing merely that the assessee's explanation was found to be unacceptable. It was observed that the Income-tax Officer had to find some material, apart from the falsity of the assessee's explanation, to support the finding that this was income. The Tribunal's view was upheld by the High Court and finally by the Supreme Court. The Supreme Court in the aforesaid decision proceeded upon the footing that the penalty was penal in character. At pages 700 and 701 of the said report it has been observed as follows : " The next question is that when proceedings under section 28 are penal in character what would be the nature of the burden upon the department for establishing that the assessee is liable to payment of penalty. As has been rightly observed by Chagla C.T. in Commissioner of Income-tax v. Gokuldas Harivallabhdas [1958] 34 ITR 98 (Bom), the gist of the offence under section 28(1)(c) is that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as its concealed income and on that footing be included in its total income for that year. In the penalty proceedings which were subsequently taken, it was held that in the circumstances of the case it would amount to laying an impossible burden of proof on the department and making the provisions for imposition of penalty wholly unworkable if, even after the assessee had admitted that the two amounts could be treated as its concealed income, the department had still to prove by independent evidence that the assessee had concealed its income. In the result, the levy of penalty for concealment of income was held justified. The relevant observations in connection with the admission are to be found at pages 70 and 71 of the report. It has been observed at page 71 that even at the state of penalty proceedings the assessee could have had a second opportunity to adduce evidence (on the cash credits or on the investment) or to explain away the earlier admission, which opportunity was not availed of by the assessee. It was held that the decision of the Supreme Court in Anwar Ali's case [1970] 76 ITR 696 was not applicable to a case where the addition was not by a mere rejection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ram's case [1973] 88 ITR 213 (All) turned principally on this aspect of the matter and it has not been held by the Allahabad High Court that even where there is an addition to the income by express agreement, something further is required to be proved by the department. The position, however, can conceivably be different if in the penalty proceedings the assessee seeks to justify the original entries or seeks to explain away his admission or offers reasons for the same, which is not the case before us. It may be mentioned that in a later decision in the very same volume of the Income-tax Reports such opportunity had been sought by the assessee in a case decided by the Punjab and Haryana High Court, which opportunity was denied to the assessee. Where such opportunity is denied, it is obvious that the levy of penalty cannot be held to be justified. That decision is in Krishanlal Shiv Chand Rai v. Commissioner of Income-tax [1973] 88 ITR 293 (Punj). In that case, in the course of reassessment proceedings in pursuance of section 143(3)/148 of the Income-tax Act, 1961, the assessee gave a statement surrendering the amounts of certain credits on the basis of hundis shown in the names o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proof and it was open to the assessee to prove in the penalty proceedings that the admission made by him during the course of the assessment proceedings was wrongly or illegally made or was incorrect ; that the assessee could lead evidence during such proceedings to show that he had not concealed any income or furnished inaccurate particulars thereof. According to the Punjab High Court, if the assessee failed to prove this, the income-tax department would be justified in levying penalty on him under section 271(1)(c). In our view, whether a revised return is filed or an admission is made before the Income-tax Officer in the course of original assessment proceedings would seem to make little difference. The basis in both the cases is the same, viz., that the assessee agreed to accept the amounts as his income from business for the year in question. Once this true position is established, it would appear that it would be sufficient for the department to seek lo discharge the onus in the penalty proceedings by relying upon this admission, and at that stage the onus would seem to shift to the assessee to show in the penalty proceedings that the admission made by him was incorrect as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that such explanation had not been accepted in the assessment proceedings. This is not the case before us and, accordingly, this decision can have no application. It was urged by learned counsel for the assessee that although the assessee had agreed to the inclusion of Rs. 90,000, it would be able to satisfy us that at the highest only an amount of Rs. 25,000 could have been added in the assessment year in question. Mr. Joshi, on behalf of the revenue, then pointed out that this aspect was not of any relevance inasmuch as the minimum penalty as prescribed had been levied and that for the purpose of levy of penalty the amount to be considered is the amount of tax avoided, for which purpose the income as assessed by the Income-tax Officer alone will have to be considered. The position might have been different had the Inspecting Assistant Commissioner and subsequently the Tribunal levied penalty at a higher rate than the minimum against the assessee. In case penalty at a higher rate had been imposed, it might perhaps have been open to the assessee to urge that, in spite of the agreement, the proper amount that could have been properly added in the assessment year was less than the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
