9911796707
TMI Blog1977 (9) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 28,117. The ITO considered that the results disclosed were not verifiable and that there were unexplained cash credits. The ITO estimated the income at Rs. 1 lakh. The AAC reduced the estimate to Rs. 80,000 subject to allowance of depreciation. After giving effect to the appellate order, the income worked out at Rs. 68,602. The ITO had initiated penalty proceedings under s. 271(1)(c) read with the explanation thereto as the difference in the income returned and income assessed was of more than 20 per cent and the matter in this regard was referred by him to the IAC as the penalty leviable exceeded Rs. 1,000. The IAC observed that the assessee failed before him to displace the presumption that the failure to return the correct income di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply for the reason that having regard to the turnover for this year when compared with the last year, the estimate of income made this year did not appear to be unreasonable. According to the learned counsel for the assessee, the income as finally worked out was merely an estimate which had been veried considerably at different stages and that therefore it could not be said that the difference of more than 20 per cent in the income returned and income assessed was on account of any fraud or gross or wilful neglect on part of the assessee. The learned counsel for the assessee also raised the point that penalty under consideration had been levied on Shri Gurbachan Singh as the sold proprietor of the concern and not on the assessee firm. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trading account and for cash credits. The addition in the trading account was of Rs. 46,531 which was reduced under s. 154 by the AAC to Rs. 19,588. The other addition was of Rs. 25,000 for unproved cash credits in the names of Kulwant Kaur (Rs. 11,000), Harjit Kaur (Rs. 12,000) and a squared up account of Rs. 2,000 in the name of Ujagar Singh. The ladies were the wives of the two partners. We consider that though there is considerable force in the contention of the assessee that for the addition in the trading account, the element of fraud or gross or wilful neglect on the part of the assessee may not be established but the same cannot be true of the cash credits. In his written note dt.9th Aug., 1972submitted before the AAC, a copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantum proceedings. It was not done even in the penalty proceedings, which were independent proceedings, before the IAC. The ladies were not produced at any stage, no confirmatory letters from them were filed and they could not be examined. In the circumstances it could not be said that the assessee firm had discharged the onus so far as the difference in the income returned and income assessed pertained at least to these cash credits. The assessee firm had thus understated its income to the extent of these cash credit and there was element of fraud. For this penalty under the explanation was exigible. We further do not find any merit in the other contention of the assessee that penalty had been levied on a wrong person. It was a case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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