TMI Blog1974 (6) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment for the year 1960-61 was made on March 8, 1965, on the total income of Rs. 90,611 including income from undisclosed sources at Rs. 36,700. The Income-tax Officer initiated penalty proceedings and as the minimum penalty leviable was more than Rs. 1,000 he referred the case to the Inspecting Assistant Commissioner of Income-tax, under section 274(2) of the Income-tax Act, 1961 (hereinafter referred to as " the Act "). The penalty notice was duly served on the assessee- petitioner who filed a written explanation and also appeared through an advocate. After hearing the assessee, the Inspecting Assistant Commissioner levied penalty of Rs. 8,500 for the assessment year 1960-61, under section 271(1)(c) of the Act. The assessee-petitioner filed a revision petition before the Commissioner of Income-tax who after hearing the assessee-petitioner rejected the revision petition and upheld the order of the Inspecting Assistant Commissioner and hence this application under article 226 of the Constitution with the prayers as noted hereinabove. No appeal was filed against the order of the Inspecting Assistant Commissioner as a disclosure-petition was pending for final disposal before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, the petitioner, and M/s. R. B. Industries were produced before the Income-tax Officer for examination. On consideration of the materials on record which have been discussed elaborately in the assessment order, the Income-tax Officer found that the business of M/s. R. B. Industries is a branch of the assessee-firm. The Income-tax Officer while discussing income from other sources observed that the sum of Rs. 25,000 was deposited in the Punjab National Bank, Gauhati, on June 22, 1959, in the name of Smt. Gayatri Devi, wife of Bherulal Siotia, who was a partner of the assessee-firm. This amount had been voluntarily disclosed by the firm in their revised return filed by it in the course of the assessment proceeding. This income has been shown under the head " business, profession or vocation ". On receipt of notice Bherulal Siotia, a partner of the assessee-firm, along with Shri S. P. Sarma, C.A., who represented the assessee-firm, failed to adduce any evidence in support of the assessee's claim that the amount of Rs. 25,000 deposited was out of "some business" transactions of the firm. Therefore, the Income-tax Officer had no other alternative but to assess the sum of Rs. 25,000 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources and in that view the appellate authority confirmed the addition of Rs. 25,000 as income from concealed sources. Mr. Choudhuri, the learned counsel appearing on behalf of the assessee-petitioner, vehemently submits that there were no penalty proceedings with respect to the sum of Rs. 25,000. This submission, however, is not acceptable for the following reasons : The Inspecting Assistant Commissioner of Income-tax, Shillong Range, Shillong, had observed in the impugned order as follows : "In the revised return filed by the assessee an additional income of Rs. 25,000 was shown under the head 'business' but the exact particulars of income was not furnished . . . . In the course of hearing before me no further evidence is produced it is merely submitted that the loans and deposits represent the genuine borrowing by the assessee but no further evidence is available. It is also found that the assessee did not disclose any business in the name of M/s. R. B. Industries in the return filed for the year. Considering the circumstances of the case, I am of the opinion that the assessee is liable to penalty under section 271(1)(c) of the Act for concealment of the particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the burden upon the department for establishing that the assessee is liable to payment of penalty. As has been rightly observed by Chagla C.J. in Commissioner of Income-tax v. Gokuldas Harivallabhdas, the gist of the offence under section 28(1)(c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and, therefore, the department must establish that the receipt of the amount in dispute constitutes income of the assessee. If there is no evidence on the record except the explanation given by the assessee which explanation has been found to be false it does not follow that the receipt constitutes his taxable income. Another point is whether a finding given in the assessment proceedings that a particular receipt is income after rejecting the explanation given by the assessee as false would prima facie be sufficient for establishing in proceedings under section 28 that the disputed amount was the assessee's income. It must be remembered that the proceedings under section 28 are of a penal nature and the burden is on the department to prove that a particular amount is a revenue receipt. It would be perfectly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness transactions of the firm. Thus, in the instant case, it is an admitted position that the sum of Rs. 25,000 represented the income of the assessee from " some business ". But the assessee concealed the particulars of this income. This concealment of the particulars of income of Rs. 25,000 cannot but be held to be conscious concealment on the part of the assessee on consideration of the entire facts and circumstances in the instant case. In the circumstances, we hold that the present case so far as it relates to the sum of Rs. 25,000 clearly comes within the scope of section 271 (1)(c) of the Act and the penalty proceedings were validly initiated regarding this income of Rs. 25,000. But, since the appellate authority has found that the source of income of Rs. 11,700 has been satisfactorily explained by the assessee, the final order in levying the penalty of Rs. 8,500 which was made in consideration of the two items of income as from undisclosed sources has to be revised. In the result the impugned order of penalty of Rs. 8,500 is set aside and the case is remanded to the Inspecting Assistant Commissioner of Income-tax, Shillong Range, Shillong, for disposal of the penalty ..... 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