1962 (3) TMI 87 - HC - Income Tax

Summary

Issues Involved:
1. Whether the sum of Rs. 5,000 was income of the assessee within the meaning of section 28(1)(c) of the Income-tax Act.
2. Whether the department discharged its burden of proof in establishing that the sum of Rs. 5,000 was income.
3. Whether the penalty proceedings under section 28(1)(c) were justified.

Detailed Analysis:

1. Whether the sum of Rs. 5,000 was income of the assessee within the meaning of section 28(1)(c) of the Income-tax Act:
The Income-tax Officer discovered certain cash deposits in the Amanat Khata of the assessee during the assessment year 1946-47. The deposits were Rs. 3,000 on Pus S. 7, which was withdrawn on Magh B. 1, and Rs. 5,000 on Chait S. 7, which was withdrawn on Baisakh S. 9. The cash book showed that the cash was received from a byopari, but the name of the byopari was not given. The Income-tax Officer added Rs. 5,000 as income from undisclosed sources, noting that the sum of Rs. 3,000 was covered by the deposit of Rs. 5,000. The Appellate Assistant Commissioner confirmed this addition, stating that the name of the depositor was not available in the account books, nor was any evidence provided. The Tribunal concurred, stating that the assessee was deliberately concealing the source of this income.

2. Whether the department discharged its burden of proof in establishing that the sum of Rs. 5,000 was income:
The Tribunal held that the department had discharged its burden of proof in establishing that the sum of Rs. 5,000 was income of the assessee. The Tribunal noted that the assessee's explanation that he could not remember the names of the byoparies due to the lapse of time was "no explanation at all." The Tribunal observed that the assessee must have had a record of the persons with whom he was dealing in the account books and that the failure to provide the names indicated that he was gambling with the income-tax assessment. The Tribunal concluded that the assessee was deliberately concealing the source of this income, and the penalty was clearly attracted.

3. Whether the penalty proceedings under section 28(1)(c) were justified:
The Income-tax Officer issued a notice under section 28(3) to show cause why the assessee should not be penalized under section 28(1)(c). The assessee's explanation was rejected as fallacious, and the Income-tax Officer observed that the name of the byopari was not noted in the account books deliberately. The Appellate Assistant Commissioner and the Tribunal both confirmed the penalty, with the Tribunal emphasizing that the penalty was justified based on the deliberate concealment of the income source. The court noted that penalty proceedings are not criminal but civil in nature, and the burden of proof on the department was met through the materials available from the assessment proceedings and the additional evidence considered during the penalty proceedings.

Conclusion:
The court concluded that the Tribunal was right in holding that the department discharged its burden of proof in establishing that the sum of Rs. 5,000 was income of the assessee within the meaning of section 28(1)(c) of the Income-tax Act. The penalty proceedings were justified based on the deliberate concealment of income and the additional evidence considered. The question referred to the court was answered in the affirmative, and the reference was returned with this answer to the Tribunal. The opposite party was awarded costs of Rs. 200 from the assessee.