TMI Blog1991 (3) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... addition on account of under valuation of closing stock for this year came to Rs. 44,20,094. A show cause notice was issued under s. 18(2) of the WT Act r/w s. 18(1)(c) calling upon the assessee why order imposing penalty should not be passed. The WTO, while passing the order of penalty, has mostly reproduced the order of the CIT(A) in quantum appeal dt. 31st March, 1986 in which the CIT(A) had confirmed the addition made by the WTO in the order of assessment. The WTO, therefore, invoked the Expln. 4 to s. 18(1)(iii) and held that since the value of the assets declared by the assessee at Rs. 11,68,881 was less than 70 per cent of the value determined in final assessment, the assessee was liable to penalty under s.18(1)(c) of the Act. He computed such penalty at Rs. 1,98,239. It is not disputed that the addition to the quantum is no longer in dispute. When the matter went before the first appellate authority, he deleted the penalty accepting the argument of the assessee's counsel that the assessee had adopted a method of valuation which he had done in earlier years and which was accepted by the Department upto the asst. yr. 1978-79. Therefore, the assessee could not be accused of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be out of the mischief of the Explanation until and unless the Department is able to establish that the assessee had in fact concealed the particulars of the income or furnished inaccurate particulars thereof. Shri Mansukhani, the ld. D.R., on the other hand, relied on a decision of the same Court (P H High Court) in the case of CIT vs. Bharat Tubewell Stores (1981) 132 ITR 241 (P H) in which the Court held that in order to justify the levy of penalty, there must be some material or circumstance leading to the reasonable conclusion that the amount does represent the assessee's income, it being not enough for the purposes of penalty that the amount has been assessed as income and the circumstances must show there was animus, i.e., conscious concealment or conscious furnishing of inaccurate particulars on the part of the assessee. The same High Court, however, held that the purpose of the Explanation to s. 271 (1)(c) is to differentiate between two types of assessees : those who have reported correct income upto eighty per cent of the assessed income and those who have not. In a case of the first type, the onus lies on the Department to prove fraud or gross or wilful neglect in not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved both the abovementioned decisions, namely, the Full Bench decision of the Patna High Court in CIT vs. Nathulal Agarwala sons and the Full Bench decision of the Punjab Haryana High Court in Vishwakarma Industries vs. CIT. In this case, the Supreme Court held that the burden placed upon the assessee is not discharged by any fantastic explanation nor is it the law that any and every explanation by the assessee must be accepted. It must be an explanation acceptable to the fact-finding body. Similar view was expressed by the Supreme Court in a later decision in the case of Chuharmal vs. CIT (1988) 70 CTR (SC) 88 : (1988) 172 ITR 250 (SC). In that case, the total assessable income of the assessee was Rs.90,568 after inclusion of the value of watches, whereas the petitioner had returned an income of only Rs. 3,113, which was less than 80 percent of the assessed income, and the Supreme Court held that the Explanation to s. 271(1)(c) inserted in 1964 applied, and the Department could be said to have discharged its onus of proving concealed income. Shri Mansukhani also brought to our notice a more recent decision of the Punjab Haryana High Court in CIT vs. Rohtak District Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d furnished the return of net wealth on 11th April, 1985, although it was due on 30th June, 1982, resulting in a delay of 33 months. The explanation given to the show cause notice was that proceedings under s.132 of the Act were initiated on 19th Feb., 1982 to 28th Feb., 1982 and the books of account for the year ended 27th Oct., 1981 were seized by the IT authorities. Since the books were in possession of the Department and were not released till the specified date, the accounts for S.Y. 2037 could not be finalised and therefore the assessee could not prepare the details required for furnishing the return of net wealth for the year concerned. The WTO did not accept this explanation. According to him, the assessee could have contacted the WTO for taking extracts or xerox copies of the books of account so as to enable him to furnish the return of net wealth in time. No such efforts were made by the assessee. The WTO also noticed that the assessee had approached the ITO for taking extracts of the books of account in Aug., 1984 only when the ITO issued notice under s. 148 of the Act. In appeal. the CWT(A) found that the income-tax return was filed on 20th Nov., 1984 and the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the return for the asst. yr. 1982-83 was filed, the assessee adopted other method of valuation even for this year and in doing so was clearly guilty of filing inaccurate particulars of his wealth. The relevant finding of the CWT(A) in this regard are contained in para 3 of his order and read as follows: "The decision of Supreme Court in this point was well known long before the appellant filed his WT return for the year under appeal and, therefore, in accordance with the law as laid down by the Supreme Court, the appellant should have filed his stock and filed his return accordingly. That the appellant did not do so clearly shows that he wanted to present an under valued stock for the purpose of WT. The appellant's second argument that the books of accounts were lying with the Department and so the appellant was not in a position to conceal particulars of wealth because all the particulars were known to the Department, does not hold good. In fact, it adds to the guilt inasmuch as having known that the books are with the Department and all the particulars are known to the Department, the assessee deliberately tried to under value his stock. More so, when the appellant was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the return of net wealth in the present case for the asst. yr. 1982-83 was filed long after the Supreme Court decision was known and the assessee was found to have still adopted a global method of valuation while returning its net wealth, it cannot be said that the presumption of concealment that can be legitimately be drawn against the assessee has been adequately and justifiably rebutted by the assessee. We are in full agreement with the conclusion reached by the CWT(A) while confirming the penalty for the asst. yr. 1982-83. We would, therefore, confirm the orders of the CWT(A) and reject both the appeals of the assessee for the asst. yr. 1982-83. 11. In the result, both the appeals of the assessee for the asst. yr. 1982-83 are dismissed. 12. So far as the appeal for the asst. yr. 1983-84 is concerned, this is also an appeal against the order of the CWT(A) confirming penalty under s. 18 (1)(c) of the WT Act under similar circumstances as have been discussed and narrated for the asst. yr. 1982-83. For this year, the return of net wealth was filed on 11th April, 1985. An addition of Rs. 51,49,468 was made to the assessee's declared wealth on account of under valuation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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