1971 (10) TMI 22 - HC - Income Tax

Whether the order of the Appellate Tribunal was vitiated by its failure to consider all the material upon which the Appellate Assistant Commissioner rested his decision upholding the order of penalty imposed by the ITO - Whether the mere failure of the assessee to prove the nature and source of the deposits was sufficient to discharge the burden of the department that the assessee was liable to penalty under section 28(1)(c) - held that in the absence of cogent material evidence, apart from the falsity of the assessee s explanation, it cannot be inferred that the assessee has concealed the particulars of his income or has deliberately furnished inaccurate particulars - therefore, we answer both the questions in the negative and against the department

Summary

Issues:
1. Failure to consider all material by the Appellate Tribunal in upholding penalty imposed by the Income-tax Officer.
2. Whether failure of the assessee to prove nature and source of deposits was sufficient for penalty under section 28(1)(c) of the Income-tax Act, 1922.

Analysis:

Issue 1: Failure to consider all material by the Appellate Tribunal
The case involved assessment years 1955-56 and 1956-57. The Income-tax Officer initiated proceedings under section 34 for the assessment year 1955-56 due to suspicious cash credits in the books of account. The assessee surrendered cash credits for both years. The Income-tax Officer imposed penalty, which was upheld by the Appellate Assistant Commissioner. However, the Tribunal held that the burden of proving deliberate concealment was not discharged by the department, thus no penalty was warranted. The High Court noted that the Tribunal did consider all material, including the fact that the assessee agreed to additions in the return. Therefore, the first issue was answered against the department.

Issue 2: Failure of the assessee to prove nature and source of deposits
The second issue revolved around whether the failure of the assessee to prove the nature and source of deposits was sufficient for penalty under section 28(1)(c). The High Court referred to the Supreme Court decision in Commissioner of Income-tax v. Anwar Ali, which held that without cogent material evidence, concealment of income cannot be inferred solely from the falsity of the assessee's explanation. As the burden of proof was on the department and not satisfactorily discharged, the High Court answered the second question against the department as well. Therefore, the imposition of penalty under section 28(1)(c) was not justified in this case.

In conclusion, the High Court answered both questions in the negative and against the department. Since no appearance was made on behalf of the assessee, no costs were awarded, and the counsel's fee was assessed at Rs. 200.