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TMI Blog1958 (3) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... s being equal. Manilal died sometime after May, 1944, i.e., in S.Y. 2000. In the relevant account year S.Y. 2003, the assessee firm was constituted by two equal partners, they being Chimanlal Gokuldas and Rasiklal Manilal, the latter being the only son of Chimanlal's deceased brother, Manilal. Their shares were equal. 4. Up to and including S.Y. 2002, the said firm carried on business at Nadiad only. On October 25, 1946, it opened a branch in Bombay under the name and style of Bombay Metal Works. In the set of account books relating to the Bombay business, the following credits (rounded to the nearest rupee) appeared: Rasiklal Manilal ₹ 7,601 (Partner). Jaswantlal Chimanlal ₹ 2,534 Jayantilal Chimanlal ₹ 2,534 (Sons of the other partner, Chimanlal). Sundarlal Chimanlal ₹ 2,534 ₹ 15,203 The credits made their appearance on October 25, 1946, i.e., the first day of the account year S.Y. 2003. The said amount of ₹ 15,203, was divided equally between the two partners, Rasiklal and Chimanlal, though the amount stood to the credit of the three sons of Chimanlal. Chimanlal was examined on March 17, 1950, in regard to the source of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imanlal, his brother had directed him to divide the amount equally between him and his brother's son, Rasiklal, but the money was not in his custody and was in the custody of Rasiklal, then aged 14. No explanation was given as to why the money was not divided immediately after the death of Manilal according to instructions, if they were given. Chimanlal further admitted that there was no evidence whatever to support the story of the sale of the ornaments by Manilal. 5. The said amount was added to the total income of the firm as income from undisclosed sources. That assessment had become final. In due course the Income-tax Officer completed the proceedings that he had initiated under section 28(1)(c) and imposed a penalty of ₹ 4,000. The material portion of section 28(1)(c) is as follows: "28. (1) If the Income-tax Officer....................., in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he...........................may direct that such person shall pay by way of penalty," etc. The Appellate Assistant Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following words and referred the case to the President as required by section 5A(7) of the Act: "Whether on the material on record, the assessee has committed an offence as described in section 28(1)(c)?" The President of the Tribunal himself heard the point and he came to the conclusion that the explanation offered in regard to the source of ₹ 15,203, viz., that it represented the sale proceeds of the gold ornaments was "not true". In regard to the question of the burden of proof, he also observed as follows: "It is on the material that is on the record the Income-tax Officer has to determine whether the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of his income." Having so observed, he held as follows: "On the material on the record, I have no doubt in my mind that the explanation offered by the assessee is not true." He, however, took the view that the assessee had not committed an offence as described in section 28(1)(c) for reasons given by him in paragraph 5 of his order dated August 10, 1956. Briefly stated those reasons are: (1) that the money came to Bombay o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary to do so as the statement of the case drawn has sufficiently brought out the issue about "burden of proof" under section 28(1)(c). G. N. Joshi, for the Commissioner. S. P. Metha with Mahendra Shah, for the assessee. JUDGMENT CHAGLA, C.J. It is difficult to understand why the Tribunal has made this reference. It appears that the assessee was assessed to tax on an income of ₹ 15,203 which the Department held to be income from undisclosed sources. A partnership was being carried on between two brothers Chimanlal and Manilal. Manilal died in S.Y. 2000. In the relevant account year S.Y. 2003 which corresponds to the assessment year 1948-49, the assessee firm was constituted by two partners, Chimanlal and Rasiklal, the son of Manilal. Up to S.Y. 2002, the firm carried on business at Nadiad only. On the 25th of October, 1946, which was the first day of the account year S.Y. 2003, the assessee opened a branch in Bombay, and the following credits appeared in the books of account of the Bombay branch: Rasiklal Manilal ₹ 7,601 Jaswantlal Chimanlal " 2,534 Jayantilal Chimanlal " 2,534 Sunderlal Chimanlal " 2,534 the last three being the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 28(1)(c) in regard to its income of the previous year S.Y. 2003 relevant for the assessment year 1948-49." Now, the view taken by the dissenting member of the Tribunal and which view is also pressed upon us by Mr. Joshi is that inasmuch as the explanation given by the assessee is found to be false, that fact in itself is sufficient to entitle the Income-tax Officer to come to the conclusion that the assessee has committed the offence which calls for this penalty. Now, it is true that in the assessment proceedings, it is open to the Department to take the view that if a certain receipt appears in the books of account of the assessee, and the assessee is not in a position to give an explanation in regard to that receipt, that receipt constitutes an income from undisclosed sources. But the question that we have to consider is whether it is open to the Department to come to a similar conclusion when proceedings are taken under section 28(1)(c). The proceedings under section 28(1)(c) in their very nature are penal proceedings, and the elementary principles of criminal jurisprudence must apply to these proceedings, and nothing is more elementary at least in this country in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for giving a false explanation. The charge against him is that he gave inaccurate particulars about his income, and it is not possible to infer from the falseness of the assessee's explanation that the receipt necessarily constitutes an income of the assessee. It is hardly necessary to emphasise that the assessee is not called upon to prove his innocence; it is for the Department to establish his guilt. If there was any evidence on which the Income-tax Officer had relied, then undoubtedly it was for him to be satisfied under the provisions of section 28(1)(c), but when there is no evidence the majority of the Tribunal was perfectly right in coming to the conclusion that the charge against the assessee was not brought home to the assessee. There is one other aspect of the matter, which is also of considerable importance. The President of the Tribunal, when the matter was referred to him, with two members having differed, also took the view that the income in respect of which the penalty proceedings were launched, was not earned in the assessment year and, therefore, these penalty proceedings could not have been taken. Now, Mr. Joshi says that once an assessment has been made wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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