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TMI Blog1984 (6) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment was completed after obtaining the directions of the IAC under section 144B of the Act. No appeal was filed by the assessee against the said assessment. Thereafter, the ITO initiated penalty proceedings under section 271(1)(c). In reply to the ' show cause notice ' the explanation dated21-3-1983of the assessee was that the difference between the assessed income and the returned income did not amount to any concealment or furnishing of inaccurate particulars. However, the ITO relied upon the following factors, which had influenced the assessment proceedings : 271(1)(c) was bona fide and all the facts relating to the same and material to the computation of its total income had been disclosed by it, and, therefore, the presumption of concealment of income had been duly rebutted. The penalty could not, therefore, be sustained. 1. Bill No. 438 dated24-3-1978for Rs. 2,637.57 from Rakesh Chand Mahesh Chand,Meerut, was not entered in the ledger. 2. Purchase and sale vouchers, cash memos, quantitative tally were not produced before the ITO though cash book, ledger, stock registers and purchase vouchers were produced before the IAC during section 144B proceedings. The stock reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of account of the assessee and that the absence of sale vouchers could not go unobserved. He also observed that serving of liquor in open glasses could not be lost sight of. He also observed that the assessee had not been able to show that either the turnover estimated or the net profit rate applied thereto, was wrong or unreasonable. He held that where an assessee accepts income assessed, which is far different from the income returned, the difference between the income assessed and the income returned is concealed income. He also observed that the acceptance by the assessee of the assessment made, led to the presumption that the income assessed represented the true income of the assessee and that since there was a wide difference between the income returned and that assessed, the difference could be presumed to represent the concealed income of the assessee. According to him, the assessing officer in these circumstances did not require any further proof to hold that the income in question was the assessee's concealed income. Accordingly, he upheld the penalty. 5. The assessee, being aggrieved, has come up in appeal before us. Shri S.D. Bahl, the learned counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. He also pointed out that the assessee had already explained that appeal could not be filed as the firm was dissolved on31-3-1978and because the partners had to bear tax at Rs. 2,473 only. Reference was also made by him to the decision of the Hon'ble Patna High Court in CIT v. Binod Co. [1980] 122 ITR 832, wherein it was held that the assessee's agreeing to addition of cash credit to the total income, did not amount to admission of concealment of income. Reference was also made by him to the decision of the Hon'ble Punjab and Haryana High Court in Vishwakarma Industries v. CIT [1982] 135 ITR 652 (FB) wherein it was held that the burden of discharging the onus would be like the one in the ordinary civil proceedings. Reliance was also placed by him on the following observations made by the Allahabad Bench ' A ' of the Tribunal in the case of Biland Ram Hargun Dass v. ITO [1984] 8 ITD 772 : " It is well established that penalty cannot be levied merely because a certain item is surrendered unless there is material on record to show that the surrendered item was the assessee's income. In other words, no penalty can be imposed simply because the assessee had agreed that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee in respect of which the particulars had been concealed. Therefore, the only question to be examined and considered with reference to Explanation 1 to section 271(1)(c) is whether the explanation offered by the assessee was bona fide and all the facts relating to the same and material to the computation of its total income had been disclosed by it. Therefore, the decisions referred to by the income-tax authorities or relied upon on behalf of the revenue, which are based upon the old Explanation to section 271(1)(c) cannot assist us. 8. Though, there is no basis for the assumption that some additional material should always be forthcoming for the levy of penalty in addition to the material on which the assessment was based and the very same material can form the basis for the assessment as well as the penalty, penalty cannot be levied solely on the basis of the reasons given in the assessment order. In other words, though the findings given in the assessment proceedings are relevant and have probative value, they are not conclusive. However, it is good evidence. Coupled with the above factor is the question of effect of not filing appeal against the assessment order. Merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities. The case of the assessee was also that after the first hearing which took place before the ITO on30-11-1978, the partners had falled (sic) out. So far as the stock register is concerned, the ITO had commented that the excise authorities had punished the assessee for not maintaining it properly. We have gone through the copy of the notes of inspections recorded by the excise authorities from time to time. A perusal thereof shows that the stock register was found to be verified. It is only in the note dated8-11-1977that it was found that the shop was found open and sales being made at9.30 P.M.even though the shop should have been closed at8 P.M.It is at that stage also that it was noticed that two people had been sold liquor in glasses. As a result of the same, a fine of Rs. 200 was made against the assessee. However, the copy of the last page of the stock register placed on the paper book shows that it had been seen on 19-3-1978 by the excise inspector and again on 31-3-1978 during a surprise visit when no stock of IMFL and beer was found unsold in the shop outside the books. We are not sitting in appeal against the assessment order, nor are we reassessing the material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards salary and wages, besides other expenses like miscellaneous shortage, staff welfare, telephone, packing, insurance, bad debts, sale promotion, etc. The mere fact that the loss could not be proved and that the expenses were not held established would not operate against the assessee. The material on the record does not show that the deduction claimed or the loss claimed were false. In view of the same and looking to the material on the record and the totality of the facts and circumstances of the case, at the most, it could be said that the assessee had accepted the assessed income. But, it could not be said that the assessee had made any admission that the income was its concealed income, or that the assessee had actually earned the income assessed. It was the first and the last year of the assessee's business. We are, therefore, of the opinion that so far as the penalty proceedings are concerned, the income-tax authorities were unduly influenced by the factors enumerated earlier in this order for which bona fide explanation had been tendered by the assessee. Looking to the totality of the facts and circumstances of the case, therefore, we are of the view that the explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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