TMI Blog1994 (12) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... xplain the nature and source of the deposit in response to which the assessee contended that since the number of shareholders was more than 2200 it would not be possible for the company to produce confirmation from all of them. Subsequently, the assessee was able to furnish list of confirmation from most of the shareholders who deposited the money by means of cheques. In respect of the amount of Rs. 1,23,000 deposited in cash, the assessee was not able to furnish any confirmation but it was able to furnish the names of the subscribers, their addresses and the number of shares subscribed by them. Their income-tax file numbers could not be given on the ground that there was no information in this regard. The ITO from those facts concluded that the assessee was not able to establish the creditworthiness of the parties who deposited Rs. 1,23,000. The amount was accordingly treated as the assessee's income from undisclosed sources and was added under the head ' Other sources '. 3. There was an appeal against the addition to the CIT(A). The CIT(A) very briefly dealt with the addition. He was of the view that the assessee could not furnish anything regarding the identity or creditworth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no finding in the order of penalty to the effect that the assessee had concealed its income or had furnished inaccurate particulars thereof. It is pointed out that the penalty has been levied merely for the reasons given in the assessment order which is not permissible in law. The learned counsel for the assessee further contended that the addition was made merely because of the inability of the assessee to prove the creditworthiness of the subscribers who deposited the allotment money in cash and that finding alone was not sufficient to charge the assessee with concealment. He pointed out that the assessee had accepted the order of the CIT(A) confirming the addition only because of the low tax effect and that such acceptance did not amount to admission of guilt. Adverting to the judgment of the Supreme Court in Sreelekha Banerjee v. CIT [1963] 49 ITR 112, he pointed out that notwithstanding the fact that the assessee had submitted a list of all the shareholders with their detailed addresses and had made a request to the ITO to issue summons to them, the ITO did not accept the assessee's request and had proceeded to reject the proof offered by the assessee as amounting to not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee to prove the creditworthiness of the subscribers. It is a well settled position in law as held by the Supreme Court in CIT v. Khoday Eswarsa Sons [1972] 83 ITR 369 and in Anantharam Veerasinghaiah Co. v. CIT [1980] 123 ITR 457 that the findings contained in the assessment order do not operate as res judicata in penalty proceedings though they would be relevant and admissible material, because the considerations which arise in penalty proceedings are different from those in assessment proceedings. This position has also been accepted by the Calcutta High Court in CIT v. Bhuramal Manickchand [1980] 121 ITR 840. In the present case there has been no attempt by the ITO, as far as we could gather from the penalty order, to have a fresh look at the issue, in the light of the explanation offered by the assessee during the penalty proceedings. If one is to go purely by the findings contained in the assessment order, there can be no two opinions on the question that these findings miserably fail to bring home the concealment. The assessment order merely says that the ITO was not satisfied with the proof adduced by the assessee in support of the subscriptions received in cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint that the assessee did not address any letter to the shareholders asking them to confirm the subscription. There is no basis for this contention. The assessment order records the fact that the assessee was not able to indicate the income-tax file numbers of the subscribers since they failed to respond to the assessee's query in this regard. We also find a letter dated 9-9-1987 addressed by the assessee to the ITO which states that the assessee had sent several letters to the subscribers who have paid the allotment money in cash, but there was no response from their side. It is with this letter that the assessee had furnished a list of shareholders along with their complete addresses. Therefore, the contention of the learned D.R. that the assessee did not issue any letter to the shareholders does not appear to be correct. As we have seen earlier even the ITO has not doubted the fact. 13. The next question is whether the assessee has concealed its income or furnished inaccurate particulars thereof. The answer is to be in the negative. We have already seen that the penalty order in substance relies on the findings contained in the assessment order and does not record any indepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment is that whereas prior to the amendment the proviso was couched in such language as to give room for the interpretation that the burden to show that the explanation was not bona fide was on the revenue, after the amendment the Explanation is so worded that the burden is shifted to the assessee. The main ingredients of the Explanation, namely, that there can be no concealment if the explanation is bona fide etc. still continue to remain, though after the amendment it will be for the assessee to prove the same. In fact, sub-paragraph (c) of paragraph 12.4 of the circular No. 469 dated 23-9-1986 containing the explanatory note to the amending Act makes this position clear. It is therefore incumbent upon the assessee, on the basis of the Explanation as it stands after 10-9-1986, to prove that the explanation is bona lide etc. 14. Having arrived at the above conclusion it is now our task to enquire whether the assessee has discharged the burden. In this connection, we may first notice a few judgments as to the burden of proof, with regard to the penalty for concealment. The recent decision of the Supreme Court in Mussadilal Ram Bharose's case settled the debate as to whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proved its bona fides. It is all the more so because the names and complete addresses of the subscribers, 94 in number, who paid the application monies of Rs. 1,23,000, were furnished to the ITO in the course of the proceedings. Since the assessee could not obtain the confirmation from these persons, it had requested the ITO to invoke his powers under section 131, but the request was not acceded to. The fact that the assessee invited the ITO to issue summons indicates its bona fide. The word ' bona fide ' means ' in good faith or genuinely ; in other words it conveys absence of intent to deceive ' -- Smt. Subhadran Devi v. Sunder Dass Tek Chand AIR 1965 Punj. 188. In Sohan Lal v. Poonam Chand AIR 1961 Raj. 32 it was held that ' nothing is bona fide which is not done with due care and attention '. According to the Madras High Court decision in Chandralekha v. PK Sushila Row [1969] 2 MLJ 17 " bona fide " denotes actions which have relation to the mind or motive of the person. A bona fide transaction requires that there are no secret arrangements or reservations and that what is apparent is also real. The transactions are stated to be bona fide if they are not fictitious or colourable ..... 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