9911796707
TMI Blog1977 (5) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of unproved cash credits under statement of sales inflation in expenses etc and determined the loss at Rs. 4,91,791. The addition on account of unproved cash credits was to the tune of Rs. 1,17,000 for which the income tax Act 1951 and referred the case to the Inspecting Assistant Commissioner The Inspecting Assistant Commissioner held that the cash credits in questions represented concealed income of the assessee and levied a penalty of Rs. 1,17,000. The presented appeal is against the aforesaid penalty. 3. The cash credit in questions consisted of two sets of items one set amounted to Rs. 42,000 credited in the names of individual partners on 25th September, 1969 and the other set amounted to Rs. 75,000 credited in the names ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation regarding these credits also and treated them as assessees income from undisclosed sources and added in the assessment. 4. In the penalty proceedings the assessee offered the same explanation to the Inspecting Assistant Commissioner and contended that the credits were genuine borrowals for the purpose of Business that the assessees failure to produce necessary evidence to prove their genuineness cannot be a ground for levying penalty under s. 271 (1) (c) and that the penalty proceedings should there fore be dropped The Inspecting Assistant Commissioner did not accept the contention of the assessee. This is what he has observed. "A significant point to be noted is that aside from the assertion made in the correspondence that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f clause (c) of subs-s. (1) of s.217." So observing he levied the penalty of Rs. 1,17,000. 5. Before us, Shri Gopala Rao the learned counsel of the assessee has reiterated the submissions made before the lower authorities. He has further submitted that the case cannot be brought under the scope of the Explanation to s. 271(1)(c) of the Act since the assessment resulted in a loss while the Explanation refers to understatement of income. For the Department, reliance is placed on the order of the Inspecting Assistant Commissioner. advise 6. On a careful consideration, we feel that this is not a case where the provisions of s.271(1)(c) are attracted. It is now a settled law that in penalty proceedings the onus is on the revenue to establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well be that they represent concealed income of the individual partners to be considered in their individual assessments. Therefore, on the base of the material on record and in the absence of any evidence with the Department to support their view, it is not possible to come to a positive finding that the credits in the names of the partners represent income of the assessee of which it was guilty of concealment and, therefore the provisions of s.271(1)(c) are not attracted by these credits. 7. Similar is the position in regard to the other four credits. It is true that the assessee could not produce the parties nor could at least file confirmatory letters from them regarding the genuineness of the credits. But we understand that the addr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent assessee s own income. Since that was not done it is not possible to hold that the credits in question represent concealed income of the assessee for which penalty is leviable under s.271(1)(c) of the Act. 8. The very fact that the assessment was ultimately made on a huge loss of nearly Rs. 5,00,000 and that the business was closed down shows that there was hardly any question of the assessee trying to coneeal its income or furnishing of inaccurate particulars of income in order to evade tax. That itself rules out the applicability of s.271 (1)(c) to the facts of case. 9. We are also not satisfied that the assessee s case comes within the ambit of the explanation to s.271 (1)(c) of the Act. Shri. Gopala Rao is possibly right in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht monies from their own sources to meet the requirements of business and they withdrew the monies when funds were available. It was also probable that money came out of the partner s secret sources. Similarly, in the case of the other four credits it was not improbable that the assessee had borrowed money from local influential persons to tide over the financial difficulties and paid them off when money was available. It was also probable that the parties concerned were not willing to come forward after lapse of four years, when they were no longer in contact with the assessee, to testify the genuineness of their borrowals Assistant it would be difficult for them to explain their own sources. All that apart considering that the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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