1984 (7) TMI 131 - AT - Income Tax

Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961.
2. Explanation and justification for the cash credit of Rs. 21,600.
3. Validity of penalty proceedings and the specific charge framed.
4. Applicability of deemed income provisions under Section 68 for penalty purposes.
5. Consideration of voluntary disclosed income and intangible additions for penalty assessment.

Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c) of the Income-tax Act, 1961:
The Income Tax Officer (ITO) imposed a penalty of Rs. 22,600 under Section 271(1)(c) for the assessment year 1976-77 due to the introduction of unexplained cash credit of Rs. 21,600 in the assessee's books. The Appellate Assistant Commissioner (AAC) upheld this penalty, and the Tribunal confirmed the AAC's decision, stating that the assessee's explanations were false and that the fictitious entries were made with the intent to conceal income.

2. Explanation and Justification for the Cash Credit of Rs. 21,600:
The ITO discovered that the assessee introduced Rs. 21,600 in its cash book on 17-5-1975 under the false narration 'drawn from Punjab and Sind Bank' and withdrew the same amount on 17-6-1975 under the same fictitious narration. The ITO concluded that this amount was the assessee's unexplained money. The assessee's explanation that the entries were a mistake by the accountant and that Rs. 10,000 was disclosed under the Voluntary Disclosure Scheme was rejected. The Tribunal agreed with the AAC that the explanations were inconsistent and the entries were made deliberately to conceal income.

3. Validity of Penalty Proceedings and the Specific Charge Framed:
The assessee argued that the penalty proceedings were illusory as the ITO was not clear whether the charge was for concealing income or furnishing inaccurate particulars. The Tribunal rejected this argument, stating that the show-cause notice contained both charges and the assessee had sufficient opportunity to refute them. The Tribunal found that the assessee concealed the particulars of income and furnished inaccurate particulars, and the charge was not illusory.

4. Applicability of Deemed Income Provisions under Section 68 for Penalty Purposes:
The assessee contended that the cash credit was deemed income under Section 68 and not actual income, hence not liable for penalty under Section 271(1)(c). The Tribunal rejected this argument, citing the Orissa High Court's decision in CIT v. Ganpatrai Gajanand and other judgments, which held that deemed income under Section 68 is also subject to penalty under Section 271(1)(c). The Tribunal concluded that provisions of Section 271(1)(c) apply to deemed income assessed under Section 68.

5. Consideration of Voluntary Disclosed Income and Intangible Additions for Penalty Assessment:
The assessee claimed credit for Rs. 10,000 disclosed under the Voluntary Disclosure Scheme and intangible additions of Rs. 10,000 made in the past. The Tribunal found no co-relation between the introduced amount and the disclosed income or intangible additions. The Tribunal noted that even if these amounts were considered, they totaled Rs. 20,000, whereas the cash deposit was Rs. 21,600, leaving Rs. 1,600 unexplained. The Tribunal rejected this contention and confirmed the penalty.

Conclusion:
The Tribunal dismissed the appeal, confirming the AAC's order sustaining the penalty under Section 271(1)(c). The Tribunal found that the assessee deliberately made false entries to conceal income, and the penalty proceedings were valid and justified. The deemed income under Section 68 was also subject to penalty, and there was no merit in the assessee's contentions regarding voluntary disclosed income and intangible additions.

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