TMI Blog1997 (1) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... short 'CBH') during the previous years relevant to these assessment years. The Assessing Officer, therefore, reopened the assessments under section 147 as the assessee did not disclose truly and fully all material facts necessary for his assessments and the assessments were completed under section 143(3)/147 after the returns of income in response to notices under section 148 were filed and the penalty proceedings under section 271(1)(c) were duly initiated. A show-cause notice under section 271(1)(c) / 274 was served on the assessee and the assessee submitted a written explanation wherein it is stated that the assessee received royalty money from two companies - (i) Book Syndicate Pvt. Ltd. and (ii) Calcutta Book House, owned by the same person. It is further mentioned that the assessee was under the impression that the certificate regarding royalty received from Book Syndicate Pvt. Ltd. also included royalty from CBH. Before the Assessing Officer the mistake was admitted as due to oversight. The Assessing Officer rejected the explanation of the assessee as not reasonable since, according to him, the receipt of royalty involved is not only for this year but also for various years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with a written submission which is reproduced as under : "That the appellant is a renowned Professor in Calcutta. He has written many books on Mathematics and Life Science which are prescribed as text books in most of the schools in West Bengal. He is an honest taxpayer and has paid taxes to the tune of Rs. 2,80,000 from the assessment years 1979-80 to 1985-86.He used to receive royalty money from two publishing companies, viz., (a) Book Syndicate Pvt. Ltd. and (b) Calcutta Book House. These two units were owned by the same person. Royalty from the first concern was several times more than that paid by the second concern. The publishers used to make on account payment. The appellant had the impression from the beginning that the single certificate covered the total royalty as it came from the same person. The appellant filed the return as per the certificate. It never struck to his mind till the defect was detected. Whenever the mistake was pointed out, he paid all the taxes along with the penal interest. He always co-operated with the department regarding payment of taxes. He had no reason to suppress the income as the royalties from the Calcutta Book House were small comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Das v. ITO [1975] 98 ITR 453 (Cal.), wherein it was held that penalty proceeding is quite different proceeding and levy of interest will not prohibit the levy of penalty. 6. We have carefully considered the rival contentions, the relevant facts and material placed on the record and we have also gone through the High Court decisions on which reliance is placed by the department. It is observed and noticed from the assessment order for the assessment year 1979-80 that the assessee himself has confessed that royalty income received from CBH was not disclosed in the return from the assessment year 1979-80 onwards due to mistake. It was also admitted before the Assessing Officer that the royalty from CBH were received through cheques by making full disclosure of his own bank account. The same mistake is also admitted as due to oversight before the Assessing Officer in a written reply to the show-cause notice issued by the Assessing Officer. Before the CIT (Appeals) also the assessee explained that he was busy with his college work and writing books and, therefore, through oversight he did not disclose the royalty received from CBH. The certificates from CBH showing the year-wise pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uite substantial. This fact is indicated by the assessment order for the assessment year 1985-86 which shows the salary income to be Rs. 18,502 only whereas the royalty income is Rs. 1,99,941. It is, therefore, a reasonable assumption that the assessee devoted most of his time to writing books. Now the royalty was received from two sources: Book Syndicate Pvt. Ltd. and Calcutta Book House. Both were connected institutions being controlled by the same person. Book Syndicate was in the habit of issuing a certificate annually showing the royalty payments made during the year. Calcutta Book House had not been issuing such certificate. Both the concerns paid royalty by cheque. The assessee's case is that since he was busy with college work and in writing books, he was under the bona fide, though mistaken, belief that the amount mentioned in the certificate issued by Book Syndicate covered both the concerns and that the royalty figure mentioned therein included the royalty paid by Calcutta Book House as well. The assessee did not maintain books of account and the returns were being prepared by him without any professional assistance. Under these circumstances he says that he omitted to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee did not take professional assistance. Once the return filed for one year on the basis of the certificate was accepted, obviously the assessee had followed the same basis for the succeeding years and that explains why part of the royalty income was omitted from the returns for a number of years. The explanation is not improbable; indeed it does seem plausible to me. 13. I had earlier indicated that the income-tax law does recognise the distinction between cases of omission and concealment. In the former, there is no animus whereas in the latter, there is an element of deliberateness or an intention. This distinction has been brought out by the Madras High Court in V.L. Dutt v. CIT [1976] 103 ITR 634 at page 645, and in the case of CIT v. J.K.A. Subramania Chettiar [1977] 110 ITR 602 at page 608. Two facts support my view that the case is one of omission only and the assessee should be given the benefit of doubt. One is that the royalty received from CBH is much less than that received from Book Syndicate (see page I of the paper book). The second is the readiness with which he included the royalty amount from CBH in the returns filed in response to notices under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding concealment. Therefore, the burden was squarely on revenue to prove to the hilt the concealment. Pressing into service in the case of Badshah Prasad v. CIT [1981] 127 ITR 601 (Pat.), the Ld. counsel read the portion of the judgment on pages 607 608 where similar controversy arose. In that case Their Lordships of the Patna High Court had observed that the only material, if at all that could be called material, is a mere presumption that the assessee must be aware of the total volume of work done by him and of the payments that he was entitled to receive on that account and further Their Lordships observed, presumption of fact cannot be equated to a finding of fact and more so when against the concrete assertion by the assessee that the payment certificates received by him were basis for returning his total income, the Department had not been able to find any fact to contradict such assertion. These observations, according to him, are very vital in the present controversy. He also relied upon in the case of Hindustan Steel Ltd., in the case of CIT v. Nathulal Agarwala Sons [1985] 153 ITR 292 /22 Taxman 199 (Pat.) (FB) and in the case of CIT v. P.A. Patel [1981] 127 ITR 390 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a penalty must be imposed in every case and if the conditions laid down in the said section are established, even then the authority concerned 'may direct' the imposition of penalty. 5. I One more aspect which is conspicuous is as under: The tax authorities have treated the default as deliberate and intentional and the Ld. Accountant Member also at the end of para-6 states that the assessee has deliberately and intentionally suppressed the receipt, etc., and the allegation has not been controverted by adducing evidence in assessee's favour. The onus is sought to be shifted upon the assessee. Actually in the concealment proceedings, the onus to prove the concealment is on the revenue. From the certificates issued by Calcutta Book House, it is found that they were issued only on 3-4-1988, that is to say, much after the assessments were completed and reopening proceedings were started. As against this, earlier there was only one certificate issued by Book Syndicate. The revenue could have proved the concealment to the hilt by bringing on record a fact that earlier to these assessment years the assessee was showing the income from both the concerns even though controlled by sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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