TMI Blog1983 (10) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the case but without giving any reason for seeking adjournment. This bald request for adjournment without any reasons in its support was rejected and the appeal was heard. It is disposed of after bearing the departmental representative and perusal of records. At our asking the departmental representative furnished the copies of assessment order dated 28-7-1976, order of the Commissioner (Appeals) in the quantum appeal dated 10-3-1980 and the assessee's explanation dated 27-6-1980 furnished in response to penalty show-cause notice. 2. It is seen from the assessment order that the assessee-company had furnished a return declaring total loss of Rs. 9,96,209 including brought forward losses. The ITO, however, first computed the loss f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ITO, which has resulted in miscarriage of justice. The contention of the revenue was that this was a case to which Explanation to section 271(1)(c) was attracted and the assessee has not been able to establish that failure to return the correct income was not on account of any gross or wilful neglect on his part. Reliance was placed on the penalty order of the ITO and the order of the Commissioner (Appeals) confirming the penalty. 4. Amritsar Bench, of which one of us (Accountant Member) had been a Member, has considered the question whether penalty for concealment of income can be imposed in the case of an assessee in whose case the returned income is a loss and the assessed income is also a loss after making the addition of so-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f requirements of the context, Shri Chadha illustrated his submission by pointing out that in the context of sections 80B, 80C, 80M, etc., the word 'income' has always to be construed positive income, not negative income or loss. In support of this proposition, decision of the Calcutta High Court in National Engg. Industries Ltd. v. CIT [1978] 113 ITR 252 was cited. Reliance was also placed on a Single Member Bench decision of Income-tax Appellate Tribunal, Delhi Bench 'D' in the case of Mehrauli Dehat Transport Co. (P.) Ltd. v. ITO 1974 Tax 36(6)-83 and a decision of the Gauhati High Court in CIT v. Ahmed Tea Co. (P.) Ltd. [1978] 113 ITR 74, on behalf of the revenue, the arguments given by the IAC in this penalty order were relied upon. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(c) of the Act is not at all attracted the Tribunal has rightly observed in its order. We also feel that it will be doing violence to the language as well as the concept of Explanation to section 271(1)(c), if the word 'income' is given a meaning to include loss as well. Accordingly, we are inclined to agree with the view expressed in the two authorities referred to earlier." 12. On a careful consideration, we feel that the submission of the assessee's counsel on this point are well founded. Before a charge of concealment of income can be attributed to an assessee, it has to be seen whether he had any motive to avoid the tax and whether he had any position income which reference to which the quantum of penalty could be determined. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Madhya Pradesh High Court after the decision of the Tribunal quoted above in CIT v. Jaora Oil Mill [1981] 129 ITR 423. The High Court has held that for the purposes of levying penalty for concealment of income the loss returned, which has been later on ignored at the time of assessment and income is computed, cannot be held to be concealed income for the purpose of levy of penalty. The relevant observations of the High Court after quoting the relevant clauses of section 271(1)(c) are quoted below : "The crucial words are 'the amount of the income'. 'Income' has been defined under section 2(24) of the IT Act. It is an inclusive definition and it covers even such items which are not income in the natural sense of the word. The co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition came to be made for assessee's failure to substantiate the explanation given. Further it is seen from the assessee's explanation dated 27-6-1980 in response to show-cause notice that it could not produce the two creditors before the ITO as both of them were not available in India when the proceedings were taken up by the ITO for making assessment and that it had led sufficient secondary evidence in support of the genuineness of the cash credits in the shape of advocate's letters, statements of creditors' brother and copies of bank account, etc., to show that the creditors were men of means and they were in a position to advance the loans, which they, in fact, did, etc. It was also pointed out in the explanation that in addition to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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