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TMI Blog1991 (7) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... taken was only for the purpose of repayment to these persons. The ITO did not accept the contention of the assessee and made an addition of Rs. 14,000 as income from other sources. The assessee was also not successful before the first appellate authority. 3. Before us, the learned counsel for the appellant, Shri M.J. Swamy argued that the assessee had genuinely taken loan from Sri Syed K. Rafi and Smt. Habeeb Bi which was utilised for the construction of the maternity home. These persons were going abroad and demanded that their money should be returned. Since the assessee did not have any funds at that time, she had to borrow the sum of Rs.14,000 from her minor children. It is also pointed our by the learned counsel that the ITO has not cast any doubt on the fact of borrowal from the minor children. He also urges that if the ITO was not satisfied, he should have summoned the persons viz. Syed K. Rafi and Habeeb Bi. Sri Swamy, therefore, prays that the addition has wrongly been made by the ITO and, therefore, should be deleted. 4. On the other hand, the learned departmental representative, Sir Shyam Sunder, pointed out that alongwith the return of income for the relevant year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from other sources. These additions were considered as concealment of income and a penalty of Rs.44,368 was levied. 7. On appeal to the CIT(A), the assessee did not succeed, and as a matter of fact, the CIT(A) pointed out some arithmetical error due to which the penalty was increased from Rs.44,368 to Rs. 57,146. The CIT(A) directed the ITO to levy a minimum penalty of the said sum of Rs. 57,146. Against this order of the CIT(A), these assessee has come in appeal before us. 8. The learned counsel, Sri Swamy, strongly argued that the CIT(A) was in error on facts and in law in confirming the penalty under s. 271(1)(c). On the facts and in the circumstances of the case, the assessee cannot be held guilty of concealment or filing of inaccurate particulars. The learned counsel points out that as far as disallowance of interest of Rs.55,813 is concerned, this has been disallowed by the ITO on the ground that this interest pertains to the earlier years. He points out that during the course of the accounting year relevant to the assessment year under appeal, the assessee had claimed interest of Rs.1,01,723 but on examination, the ITO gave a finding that only interest of Rs.45,910 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (1984) 42 CTR (Del) 188 : (1986) 157 ITR 822 (Del). The learned counsel, therefore, urges that the penalty order of the Revenue should be vacated. 12. On the other hand, the learned departmental representative, Sri Shyam Sunder, strongly urges that the assessee was guilty of concealment of income. he points out that the behaviour of the assessee in filing revised return would go to show that the assessee had deliberately concealed particulars of income and had filed the loss return. When the ITO had detected the concealment, the assessee immediately filed the revised return reducing the loss. He further points out that the claim of interest of the assessee at Rs. 1,10,723 was a fraudulent claim. The assessee should have realised that only a sum of Rs. 45, 910 could be allowed as the legitimate interest of the year and, therefore, the excess claim to the extent of Rs. 55,813 was made by the assessee with a view to defraud the Revenue. The departmental representative, therefore, considers the interest claim as concealment by the assessee. Regarding the sum of Rs. 14,000 which is alleged to have been borrowed from close relations for the purpose of construction of the nursing hom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Rs.14,000 represented concealed income of the assessee. The addition may have been made and even sustained by hte appellate authorities on a different footing, but that does not automatically lead to the conclusion that the assessee is guilty of concealment. Finding in the assessment order may be material but is not enough for the purpose of penalty under s. 271(1)(c). The ITO has to conclusively prove that the assessee is guilty of concealment before the penalty under s. 271(1)(C) can be successfully levied. In the case before us, the ITO has made no attempt in his penalty order to prove that the assessee has concealed the particulars of income or has filed inaccurate particulars thereof. As a matter of fact, the penalty has been imposed in a mechanical manner on the basis of a finding given in the assessment order. The action of the ITO is contrary to the decisions of the jurisdictional High Court in the case of addl. CIT vs. Buruguppalli China Krishnamurthy Ors. (1979) 12 CTR (AP) 250 : (1980) 121 ITR 326 (AP), and CIT vs. H. Abdul Bakshi Bros. (1986) 58 CTR (AP) 13 (FB) : (1986) 160 ITR 94 (AP) (FB). The jurisdictional High Court in the case reported in (1979) 12 CTR ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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