TMI Blog1973 (3) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the question, it is necessary to briefly refer to the material facts found by the Appellate Tribunal. The assessee, an individual doing contract business, had purchased a house in May, 1951, for a sum of Rs. 29,500 in the name of his minor son. For the assessment year 1952-53, the relevant accounting year being the financial year ending with March 31, 1952, one of the questions that fell for consideration before the Income-tax Officer in the assessment of the assessee's income was whether the assessee had explained the source of Rs. 29,500 used for the purchase of the house in May, 1951. The assessee gave three inconsistent explanations. Firstly, it was stated that the amount of Rs. 29,500 represented dowry given at the time of the mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Assistant Commissioner to the effect that the explanations given by the assessee relating to the source of his investment in the house property were all false. That finding was specifically given even in the assessment proceedings. However, the Tribunal held that that finding was not sufficient to warrant the imposition of penalty, as no additional material had been produced by the department to show that the amount in question was income. The Tribunal, therefore, cancelled the penalty levied by the assessing authorities. Hence this reference. When the reference came up before us on October 8, 1971, Mr. P. Rama Rao, the learned standing counsel for the income-tax department, submitted that there appears to be further material apart fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e falsity of the explanation of the assessee relating to the source of Rs. 29,500 utilised for the purchase of the house in May, 1951, there was no other material or evidence to show or prove that the amount of Rs. 29,500 was really the assessee's concealed income. Mr. P. Rama Rao, the learned standing counsel for the income-tax department, contended that the conduct of the assessee in setting up three inconsistent false pleas with regard to the source of the purchase money of Rs. 29,500 is sufficient to infer that the amount of Rs. 29,500 was income of the assessee and he had deliberately concealed the same. This claim of the department was opposed by Mr. Jagannadha Raju, the learned counsel appearing for the assessee, contending, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount in dispute, no penalty can be levied as it cannot be said that the only inference that can be reasonably and safely drawn on such facts is that the receipt constituted the taxable income of the assessee. The findings arrived at by the income-tax authorities in the assessment proceedings for the determination or computation of tax are not conclusive for the purposes of levying penalty although they may be good evidence. However, penalty cannot be levied solely on the basis of reasons or findings given in the assessment proceedings. See Commissioner of Income-tax v. Anwar Ali and Commissioner of Income-tax v. Khoday Eswarsa and Sons. In the light of the foregoing discussion, we shall examine the facts and circumstances found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmination whether the successive false explanations offered by the assessee would be sufficient to warrant the penal proceedings. Whether the assessee gives one, two or three explanations, be they alternative or successive, it does not materially alter the legal position. In each one of such cases, it must be found that the explanation offered by the assessee was false. Giving more than one false explanation would only indicate the conduct of the assessee who failed to give the true and satisfactory version, but none the less, the result is one and the same. The assessee was unable to satisfactorily explain the source of the disputed amount and such conduct would justify or warrant the addition of such amount to the admitted income of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wife should be deemed to be income from undisclosed sources and that the assessee having concealed his income and taken untenable stands, the provisions of section 28(1)(c) of the Act were satisfied and the levy of penalty was justified. In my view, this decision is no longer good law in view of the decisions of the Supreme Court in Commissioner of Income-tax v. Anwar Ali and Commissioner of Income-tax v. Khoday Eswarsa and Sons. The decision of our High Court in R. C. No. 4 of 1970 (Commissioner of Income-tax v. Anantharam Veerasinghaiah Co.) dated November 9, 1971, on which reliance has been placed by the learned counsel for the revenue, is distinguishable on facts. Therein it was found that the explanation of the assessee in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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