1985 (12) TMI 102 - AT - Income Tax

Summary

Issues:
1. Penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 was deleted by the AAC, B Range, Bareilly.
2. Whether the burden of proof lies on the assessee to explain the nature and source of acquisition of seized goods.
3. Interpretation of Explanation 1 to section 271(1) regarding concealment of income.
4. Assessment of the credibility of explanations provided by the assessee regarding the seized gold and ornaments.
5. Reliability of entries in the accounts of goldsmiths as evidence.
6. Consideration of orders passed in assessment and customs proceedings for penalty imposition.
7. Claim of statement made under duress by the partner and its legal implications.
8. Binding nature of statements made by a partner of a firm.
9. Necessity of examining the assessee or goldsmiths before rejecting written submissions.

Analysis:
The judgment by the Appellate Tribunal ITAT Delhi-A involved an appeal by the revenue against the deletion of a penalty under section 271(1)(c) of the Income-tax Act, 1961 by the AAC, B Range, Bareilly. The case pertained to a registered firm where gold and ornaments were seized during a search, leading to an addition under section 69 of the Act. The burden of proof was a key issue, with the department arguing that the assessee failed to explain the acquisition source, while the assessee contended that the burden lay on the department. The Tribunal analyzed Explanation 1 to section 271(1), emphasizing the assessee's obligation to provide a satisfactory explanation to avoid penalty for concealment of income.

Regarding the credibility of the explanations provided by the assessee, the Tribunal found discrepancies in the claims made about the ownership and purpose of the seized gold and ornaments. Entries in the accounts of goldsmiths were deemed unreliable as evidence, lacking certification by a competent authority. The Tribunal also considered the relevance of orders from assessment and customs proceedings in penalty imposition, highlighting their probative value for incidental purposes.

The argument of a statement made under duress by a partner was dismissed, as no substantiation was provided, and previous orders indicated consistent claims by the partner regarding the seized articles. The Tribunal affirmed that a partner's statements bind the firm, emphasizing the legal principle that partners act as agents of the firm. Additionally, the necessity of examining the assessee or goldsmiths before rejecting written submissions was deemed unnecessary, and the Tribunal upheld the imposition of the penalty, setting aside the AAC's decision.