9911796707
TMI Blog1978 (7) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... ave no reply. The ITO observed that in view of the above facts, he was convinced that the assessee committed wilful concealment and levied a penalty of Rs. 9,300. In the asst yr. 1971-72, the assessee returned a loss of Rs. 216. The income as finally assessed by the Tribunal included a sum of Rs. 13,900 being the unexplained investments of the assessee. The details are, purchase of land Rs.13,500 remodelling of the house Rs.2,000 and cost of construction of the 1st floor of Kesharganj jouse Rs. 2,500 totalling to Rs.18,000. Giving a set off of Rs.4,100 being the sale proceeds of the land, the balance of Rs.13,900 was assessed as unexplained investment for this assessment year. Here also the ITO started penalty proceedings and in the absence of any explanation from the assessee, held the assessee to be liable for penalty under s. 271(1) (c) of the Act and imposed a sum of Rs.13,900 as the penalty under that section. 3. The assessee appealed to the AAC and raised several contentions challenging the justification of the penalties imposed. It was urged that no proper opportunity to explain was given to the assessee in the course of the penalty proceedings. The AAC, however, held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice also could not be complied with by the assessee family as they did not realise the serious consequences which might follow from its non-compliance. He urged that in spite of the above, the ITO should have appreciated the facts already on record and should have come to a judicious conclusion instead of the summary manner in which he imposed the heavy penalties. He drew our attention to the explanation regarding the source of the funds given at the time of assessment proceedings by the assessee. He explained that the assessee-family was living in a rural area and was not having much expenses. They were carrying on their business for several years past. Again they had agricultural income. The investments under consideration were nothing but a house which was constructed after demolishing the earlier house owned by it; a jeep was purchased and the house was remodelled and another floor was built on the same in course of time. His point was that the investments were not so large as to be incommensurate with the known sources of income of the assessee family. He contended that the assessee never maintained proper records either regarding its income or the actual investments made. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the difference between the returned income and the assessed income did not arise out of any fraud or gross or wilful neglect on its part. We find that in the case of CIT Orissa vs. K.C. Behera Others (1) the penalty under s. 271(1) (c) imposed after the Explanation thereto came into force was cancelled by the Tribunal by applying the law as it stood prior to the coming into force of the said Explanation. It was decided that the date of accrual of the cause of action is the date of satisfaction and the date of satisfaction of the ITO to start the penalty proceedings is the crucial date for the application of relevant law. Hence, the penalty could not be cancelled by ignoring the Explanation which came into force after the satisfaction of the ITO to start the penalty proceedings in that case. Again, we find that in the case of Ganpatrai Gajanand (4), the issue raised was as to whether the Tribunal was right in requiring the Revenue to prove that the amount added under s. 68 of the IT Act was in fact the income of the assessee before imposing a penalty under s. 271(1) (c). It was held that the Tribunal was not right because the amount added under s. 68 of the Act was, in fact, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditions were made, have to be again given a fresh look from the point of view of levying penalty which is not the same as making those additions. A certain item may be assessed as the assessee's income if its source could not be explained satisfactorily. A thing may be said to be not satisfactorily explained for a number of reasons; for example, lack of supporting evidence. But that would not lead to the conclusion that the explanation was improbable which is the requirement for imposing the penalty. Bearing the above principles in mind, we now proceed to examine the facts of this case. The assessee was earning income form business and agriculture for several years. This fact has not been disputed. It made some investments in constructing a house and acquiring some assets. It did not maintain any records showing the exact income earned and the amount saved there from year after year. Nor was there any record relating to the exact amount invested by it in the aforesaid assets. In our opinion, there is nothing strange for a small business-man like the assessee-family operating in an interior place, not to keep meticulous records about his income and expenditure from year to year. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue should prove that the amount deemed to be income under s. 68 should be shown to be really the income of the assessee for purposes of levying penalty after coming into force of the Expln. to s. 271 (1) (c) of the Act. 8. The question that finally emerges in this case is as to whether the assessee discharged the initial onus that lay on it under the Expln. to s. 271 (1) (c) of the Act. It is true that the assessee did not respond to the show cause notice given by the ITO in the course of penalty proceedings. But it is also true that very relevant materials were already on record before the ITO having a direct bearing on the issue that was to be decided judiciously by him. The ITO did not take into account the status and the background of the assessee. He did not consider the fact that the additions were made on the basis of estimates and that too partly accepting the explanation and partly disbelieving the explanation. Considering all the facts and circumstances of the case, in their proper perspective, we are of the opinion that the explanation given by the assessee about the amounts spent by it in acquiring the aforesaid assets and the amount saved by it from the kn ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
