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TMI Blog1985 (7) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... 71,025 ------- 3. The assessee went in appeal before the AAC, who reduced the income by Rs. 6,480 vide his order dated 10-1-1980. He also reduced the addition of Rs. 33,600 made by the ITO for the reasons stated in his order in quantum of appeal. 3.1 In further appeal, the assessee contested the remaining additions in the Tribunal. The Tribunal deleted the addition of Rs. 32,025 in respect of 350 kgs. of yarn mentioned in (c) above. However, the Tribunal sustained the addition for the cost of 50 kgs. at Rs. 5,400 as well as woollen yarn pledged on 31-3-1975 to the Bank of Baroda, which the Tribunal held had come out of the stocks pertaining to the period from 5-6-1974 and 9-12-1974. The Tribunal sustained an addition of Rs. 5,400 for the reasons mentioned in its order in paragraphs 5 and 6, while the addition of Rs. 27,120 was confirmed for the reasons in paragraphs 3 and 4 of its order. However, the ITO initiated the penalty proceedings under section 271(1)(c)/274 of the Act and thereby issued notice on the assessee to explain that why the assessee should not be penalised for concealment of income or for furnishing inaccurate particulars of income. The assessee offered the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. As stated earlier, no doubt, the addition has been made in the total income on account of the variation in the information given in the bank statement and net stock position with the appellant-firm, yet on the basis of the explanation as given it would appear to be doubtful as to whether what was actually pledged in the bank was woollen yarn or art silk yarn, because as per the certificate of the bank, they also could not categorically say as to its actual contents, except that they have simply believed the appellant-firm at the relevant time. No doubt, the appellant-firm has tried to deceive the bank by giving wrong information of course with a view to get extra overdraft facilities yet it was for the bank to properly verify physically the stock actually pledged which they do not appear to have done. That being the position, I am inclined to agree with the authorised representative that the appellant-firm cannot be now charged for the concealment of income or furnishing inaccurate particulars thereof even under the provisions of Explanation to section 271(1)(c)." 5. The revenue being aggrieved for the deletion of the penalty imposed by the ITO has preferred this appeal. Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om pages 1 to 17. In rebuttal, the learned departmental representative contends that the appeal is time barred by six days, but the same is explained in view of the application dated 15-6-1984 of the ITO. He relies upon it. On merits in rebuttal, he has nothing to add. 6. We have heard the rival contentions and gone through the record before us. First of all, we decide the preliminary issue raised by the learned counsel for the assessee, which is that whether the appeal is time barred by six days. 6.1 The record shows that the impugned order was communicated on 9-4-1984 but the appeal was filed on 15-6-1984, when it was due on 8-6-1984. Thus, the appeal filed is belated by seven days. The ITO filed the condonation application dated 15-6-1984, which was received in the office of the Tribunal on 15-6-1984 along with appeal memorandum stating therein that the appeal was due on 8-6-1984, as the service of the appellate order was made on the Commissioner, Amritsar on 9-4-1984; that complete curfew was imposed in the Amritsar city due to disturbed conditions from 3rd June to 10th June 1984 and the office remained closed ; that direction of the worthy Commissioner for preferring the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and, therefore, he is to be vigilant to file it in time. For this purpose, he is to pursue the matter in the office of the Commissioner to have the authorisation to file the appeal within sufficient time so that he may fulfil the requirements of filing the appeal in the Tribunal. In this case, we do not see it there on the part of the ITO. Accordingly, we hold that in this case, the delay of seven days is not proved and as such, the preliminary objection of the learned counsel for the assessee is to be allowed. Hence, we hold that the appeal of the revenue is liable to be dismissed on the preliminary issue that the appeal of the revenue is time barred by seven days. 7. We are further of the opinion that the appeal of the revenue is also liable to be dismissed on merits. The reasons are that no doubt the basis for imposition of penalty is the additions finally sustained by the Tribunal. But we have to see that whether the additions so sustained are representing the concealed income of the assessee for default under section 271(1)(c). It is also to be seen that whether the explanation offered by the assessee is satisfactory in response to notice under section 271(1)(c). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book, which says as under: "We refer to your letter dated 14th October, 1981 and advise that keeping in view the turnover of the stocks satisfactory conduct of the account and genuineness of the party, the cases/bales tendered for pledge are not generally opened for verifications. However, we state that the referred entries pertain to very old period and as such there is no such information available at our end." Despite it, the ITO asked the Bank of Baroda to inform whether the assessee pledged to it woollen yarn to have the overdraft facilities. The bank manager stated in reply to it that the bank had not verified it. From these two documents of the bank it is manifest that the explanation offered by the assessee is proved when he says that the assessee actually pledged silk yarn and not woollen yarn. Therefore, in view of the documentary evidences, furnished by the assessee, namely, the copy of the books of J. Trading Co. and the certificates of the bank mentioned above, we hold that the assessee has discharged its initial onus to prove that the amounts of additions are not there due to fraud or wilful or gross neglect on his part. Therefore, it is for the revenue ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts indicated that what was pledged was woollen yarn but they have already furnished a certificate dated 30-10-1981 to the effect that since the appellant-firm enjoyed good credit with them it was needless to inspect the pledged goods and in fact a further certificate dated 2-3-1982 was also obtained by the ITO wherein they have categorically stated that the bank did not make any physical inspection of the goods at the relevant time in view of the satisfactory conduct of the party and as per the general practice. Hence, according to the authorised representative of the appellant-firm this itself indicates that what the appellant-firm was alleging could have been the correct state of affairs." 7.4 No doubt, the learned departmental representative has cited Shri Narain Khanna's case but the same is not applicable to the facts of this case in view of the fact that in this case, the assessee has proved that actually it was silk yarn, which was pledged. Moreover, the bank authorities have stated that they believed the assessee and, therefore, did not verify the goods, which however justify the stand of the assessee and falsify that of the revenue. Moreover, in penalty proceedings prepo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has discharged on furnishing the aforesaid documentary evidence and the revenue has not at all brought any material to discharge the onus that the aforesaid additions are there on account of contumacious conduct and, are representing the concealed income of the assessee. 8. In view of our above discussion and reasons thereto, we hold that the assessee cannot be penalised for the amounts of additions made and sustained in the assessment proceedings, up to the level of the Tribunal as the explanation of the assessee is satisfactory, when he has shown that these amounts are not representing the concealed income of the assessee. Moreover, there is no concealment of income or furnishing of inaccurate particulars on his part, which is there on account of wilful neglect or fraud in view of the totality of the facts and circumstances of the case. Besides, the preponderance of probabilities is there in favour of the assessee, as we have mentioned above and as such, no penalty is imposable on the assessee and, therefore, we hold that the revenue is to fail on merits also. 8.1 In consequence of it, we hold that the appeal of the revenue is to fail as it is time barred. Moreover, there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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