TMI Blog1995 (3) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the new firm Hanumanbax Jwala Prasad Sons was a benami of the assessee-firm and, therefore, its income was rightly included in the assessment of the assessee-firm. The order of the Tribunal was accepted by the assessee. In the meantime the return of income for the assessment year 1979-80, which is the year under appeal, had been filed in which the assessee did not include the income of the new flrm. The ITO, following the view taken by him in the assessment year 1978-79, included the income of the new firm in the assessee's assessment. Such income was determined at Rs. 78,650. After thus completing the assessment, penalty proceedings were initiated for concealment of income. The assessee explained that all the facts had been placed before the ITO with regard to both the firms, that separate returns had been filed, that registration had also been separately applied for and, therefore, merely because the ITO had clubbed the income of both the firms it cannot be stated that the assessee was guilty of concealment. It was pointed out that the penalty proceedings on the same ground were initiated for the assessment year 1978-79 but were dropped. 3. The ITO did not accept the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee concealed its income. Our attention was drawn to the order of the Tribunal and it was contended that on the facts found by the Tribunal two views were equally plausible and that merely because the Tribunal has taken the view that the new firm was a benami for the assessee-firm, it cannot automatically follow that the assessee must be visited with penalty for concealment of income. It is submitted that the Tribunal's decision was on the basis of an overall impression gathered by it and there is no finding of any guilt in the order of the Tribunal. It was further argued that the facts for the assessment year 1978-79 where penalty proceedings were dropped were similar to the facts for the year under appeal and though it was correct to say that res judicata is not applicable to the Income-tax proceedings, if parties have permitted a certain finding to remain unchallenged on the basis of the same set of facts for a particular year normally the same finding should follow in the subsequent year also, provided there are no changes in the facts or the legal position. Our attention was drawn to the judgment of the Supreme Court in the case of Deputy CST v. K. Kelukutty [1985] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been stated, in ground (e), that the returns were filed before the same ITO and this assertion has remained uncontroverted. It is not also disputed that the relevant partnership deeds and the applications for registration were also filed before the assessing authority concerned. When all the facts have been placed before the revenue authorities, the fact that they did not accept the contention that both the firms were different does not ipso facto lead to the conclusion that the assessee attempted to conceal its income or to furnish inaccurate particulars thereof. In the case of ITO v. Burmah Shell Oil Storage Distributing Co. of India Ltd. [1987] 163 ITR 496 the Calcutta High Court has held that when a legal contention is taken on the basis of certain facts and evidence and if all those facts and evidence are placed before the revenue authorities, it cannot be stated that the assessee was guilty of concealment. If the position is otherwise and if the assessee, notwithstanding the creation of a separate firm, is required to include the income of that firm in its hands, file the return on that basis, pay the tax thereon and thereafter contend that the income of the new firm cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avy reliance was placed by the revenue authorities as well as the learned D.R. before us does not clinch the issue in favour of the department. The Tribunal in that appeal proceeded to examine the facts. The Tribunal accepted that there is no prohibition for the creation of the two firms with the same partners. After examining the facts of the case the Tribunal came to the following findings : 1. There was interlacing of funds between the firms and there was continuous money transactions between them. 2. The business of the two firms was different. The assessee's business was in tea whereas the new firm was doing money-lending. 3. The assessee's business was mainly financed by the new firm. 4. Both the firms carried on business in the same premises. 5. The members of the staff were not the same. There were fourteen members in the assessee-firm and three in the new firm. After recording the above findings the Tribunal came to the following conclusion : " Taking all the circumstances into consideration, particularly the inter lacing and inter-locking of funds between the two firm, we find that the other firm was benami of the assessee-firm as their business was one. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted the Tribunal's order for the assessment year 1978-79. Acceptance of the Tribunal's order does not amount to an admission that there was deliberate concealment and as held by the Supreme Court in the case of Sir Shadilal Sugar General Mills Ltd. v. CIT [1987] 168 ITR 705, at page 713, from agreeing to the additions it does not follow that the amount agreed to be added was concealed income. The acceptance of the Tribunal's order does not absolve the revenue from proving the mens rea of a quasi-criminal offence. We must also remember that the assessee was justified in not pursuing the matter further for the assessment year 1978-79 since in the partners' hands, where the tax rates were higher, it would have made no difference whether the income of the two firms is separately assessed or clubbed. The firms were paying tax at low rates and the real impact would only be in the partners' individual's assessments, but even that is not material in the present case. That apart, for the very year for which the Tribunal upheld the assessment, the penalty proceedings have been dropped. Though each year is to be treated separately under the Income-tax Law, in a matter where the charge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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