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TMI Blog1985 (6) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... income to Rs. 1,04,820 on appeal in the matter of assessment. On further appeal, the Tribunal in its order in ITA No. 1417 (Mds)/77 dt. 20th Dec., 1978 fixed the income from sale of timber at Rs. 45,000. As a result of the order, the total income of the assessee was determined at Rs. 1,06,320. 3. On there facts, notice under s. 274 read with s. 271 (1) (c) was issued to the assessee to show cause why penalty should not be imposed for concealment of income. The assessee sent a reply dt. 16th April, 1979. In the said reply it was stated that though the ITO had made an addition of Rs. 21,512 under the head profession , this was deleted by the AAC. It was also stated that the Tribunal had not disturbed the order of he AAC except in the matter of capital gains. Under these circumstances, a request was made to drop the penalty proceedings. The ITO was of the view that the assessee s representative has conveniently omitted to furnish his explanation as to why the assessee had not shown income from the sale of timber. Therefore, the ITO came to the conclusion that in the absence of explanation given by the assessee in respect of profit on sale of timber earned by him and not disclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, not correct. (iii) From the letter of the ITO dt. 12th Dec., 1975, it is quite clear that the assessee came up with the information about the sale of trees any when he was confronted by the ITO with the unexplained surplus assets of more than Rs. 50,000 On the perusal of the ITO s order it is, quite clear that the appellant has not admitted the income from the sale of trees. (iv) In the instant case also, the appellant had accepted the computation of capital gains in respect of sale of trees of the extent of Rs. 40,000. The decision of the Madras High Court in the case of Addl. CIT vs. E. Bhoopathy (1978) 113 ITR 188 (Mad) is relevant to the appellant s case. For all these reasons, the AAC agreed with the view taken by the ITO in levying penalty under s. 271 (1) (c) in the case of the appellant. 5. Not satisfied with the order passed by the AAC the assessee is in appeal before us. The ld. counsel appearing for the assessee submitted before us as under: The AAC erred in confirming the penalty levied by the ITO for the alleged concealment of short term capital gains on the sale of timber. The AAC failed to not that the assessee was under the bona fide belief that the sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er s. 271 (1) (c). The appellant is an advocate. The appellant was maintaining no books of accounts. In the course of assessment proceedings according to the AAC the appellant was asked to file a statement of wealth from 31st March, 1972 to 31st March, 1973. On comparison of the statement of wealth on 31st March, 1972 and 31st March, 1973 and on going through the bank pass book, the ITO found that the income returned by the appellant was not commensurate with the accretion to wealth as on 31st March, 1973. In the course of discussion with the ITO, the assessee s representative seems to have pointed out that out of the surplus assets of Rs. 50,000, Rs. 40,000 represents the sale of timber according to the ld. AAC. On 12th Dec., 1975 The ITO wrote a letter to the assessee asking him to furnish the details of the sale of timber and the mode of receipt of the sale proceeds etc. The ITO again wrote a letter dt. 15th Dec., 1975 stating that even after taking into account the sale of land and timber a sum of Rs. 21,512 still remains to be explained and that, therefore, he proposed to treat this as the undisclosed income of the appellant. Accordingly to the AAC both these letters were not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timber. This cannot be obviously correct. Since the assessee has stated in the statement enclosed to the return of income that during the year the liability of Leelavathy was discharged out of timber sale of Rs. 50,000 approximately under such circumstances we consider that the assessee disclosed the facts even prior to the pointing out by the ITO. Accordingly, we hold that the assessee disclosed the sale of timber in the return of income filed. 9. One of the contentions raised by the assessee was that the ITO has not given a definite finding as to concealment for levying penalty under s. 271 (1) (c). In this respect, we have seen the assessment order as extracted by the AAC in that the ITO has clearly stated that there is suppression of income derived from the sale of timber. 10. Another ground raised by the assessee in this appeal was that the assessee under the bona fide impression that the sale of timber which were sold with the roots (cultivated silver oaks) were agricultural sale proceeds and hence not liable for capital gains tax. In fact, this ground was taken even before the AAC. But there was no discussion about this point in the AAC order. Even in the ITO s order als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture [AK. T.K. M. Vishnudatta Antharjanom vs. Commr. of Agrl. IT (1970) 78 ITR 58 (SC), Oucheterlony Valley Estate vs. Commr. of Agrl. IT (1963) 50 ITR 18 (Mad), N. K. Leela Thampatty vs. Commr. of Agrl. IT (1972) 83 ITR 903 (Mad),. Commr. of Agrl. IT vs. H. Y. Casim Sait (1974) 94 ITR 467 (Mad), State of Kerala vs. Karimbeawi Tea Estate Ltd. (1966) 60 ITR 275 (SC), Nelleyappan Sastha Bros. vs. Cammr. of. Agrl. IT (1972) 86 ITR 151 (Mad). Under such circumstances, when the assessee sold silver oak s trees with roots, the assessee could have entertained a bona fide belief that the sale proceeds of silver oak trees roots are not liable to capital gains-tax. 13. "The preliminary responsibility to show reasonable cause is that of the assessee. It is then the task of the ITO or the AAC to satisfy himself whether the cause advanced is reasonable or not. If the assessee dose not give any cause at all, it is against the task of the ITO or the AAC to satisfy himself whether the circumstances which emerged from the record indicate any reasonable cause or not. Insuch case. the task of the Officer concerned in reaching that satisfaction becomes very light. When, however, some reason has be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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