9911796707
TMI Blog2006 (10) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in relation to the income of Rs.6,500 from cold drink business in the name of Smt. Vijai Laxmi Chaurasia?" Assessment years 1974-75 to 1976-77 : "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in sustaining the penalty on the basis of findings arrived by it in the quantum appeal ? 2. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in sustaining the penalty under section 271(1)(c) of the Income-tax Act, 1961 in relation to the income of Rs.10,500 from cold drink business in the name of Smt. Vijai Laxmi Chaurasia ?" 2. Briefly stated, the facts giving rise to the present reference are as follow : 3. The assessee's father late Shri Sripal Chaurasia during his life time was running a beetle shop and had also been selling cigarettes and cold drinks. Since the accounting period corresponding to the assessment year 1970-71 upto the assessment year 1972-73, the applicant was assessed at Rs.5,000 for 1970-71, Rs.6,000 for 1971-72 and Rs.7,500 for 1972-73. No books of account were maintained by the assessee. In February, 1972, he was married to one Smt. Vijay Laxmi. He filed his returns of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee and found that the contention about the business carried by his wife since 1973-74 was not worthy of credence. The Tribunal after examining the material on record, found that the assessee's contention that the business of cold drinks was done by the assessee's wife from the assessment year 1973-74 was not worthy of credence. 7. In paragraph 19 of its order, the Tribunal observed as under : "19. After carefully examining the facts on record and the orders of the authorities below and apprising the rival submissions, we feel that so far as the finding of the learned Appellate Assistant Commissioner that the business of cold drinks in fact belongs to the assessee is concerned, it is in our opinion correct. Shri Raj Kumar Chaurasia has admittedly been doing the cold drinks business which is now being claimed as belonging to his wife for the assessment years 1970-71 to 1972-73. The story that soon after his marriage with Smt. Vijai Laxmi, she of her own decided to start cold drinks business and that for that business she went to the extent of borrowing funds from a stranger being her neighbour behind the back of her husband does not conform to the hard facts of life as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalties in question were deleted by the learned Appellate Assistant Commissioner for assessment year 1973-74 and by the learned Commissioner of Income Tax (Appeals) for the later years. While deleting the penalty the Appellate Assistant Commissioner omitted to take note of the order of the Tribunal in quantum appeals though he passed the impugned order subsequently. He referred to the order of the Commissioner of Income Tax (Appeals) and on that basis deleted the addition by observing, inter alia, as below:- "So far as the investment in cold drink business and the income therefrom is concerned I find that both the issues are inter-related. In assessment years 1974-75 to 1976-77, the Income-tax Officer. had imposed penalty of concealment with reference to the income from cold drink business being run in the benami name of the appellant's wife, but the same was deleted by the Commissioner of Income Tax (Appeals) vide his order dated February 10, 1982 observing that the question of inclusion of income from cold drink shop is highly debatable so far as the penalties are concerned. It was further observed that full facts in this regard were revealed before the department when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have merely brushed aside the aforesaid analysis by observing that the matter was debatable. Where is the debate after the evidence has been appraised as above by the final fact finding authority ? With the above appraisal, we still concur in penalty proceedings. For there is nothing by way of penalty proceedings. For there is nothing by way of additional evidence so far as the reappraisal of the same evidence in penalty proceedings is concerned, we again see no justification to record a contrary finding. This being so, we are unable to accept the finding given by the first appellate authorities that the assessee has not concealed income of cold drink business, which was attempted to be passed off in the name of his wife. In fact, we find the facts of the present case more or less akin to the facts of the case in D. M. Manasvi v. CIT [1972] 86 ITR 557. There too a business was being done in somebody else's name and the issue was contested all along, and ultimately the Tribunal had given the finding that the business belonged to the assessee, and on this basis penalty was imposed on the assessee, which was upheld by their Lordships of the Supreme Court." 13. We have heard Sri Kr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. The applicant had not brought any fresh material on record to show that the conclusion arrived at by the Tribunal in the quantum appeal was factually incorrect nor any doubt has been created on the said finding. He, thus, submitted that the Tribunal was justified in sustaining the penalty. He further submitted that in respect of the addition upheld by the Tribunal in the quantum appeal, the applicant had not furnished any other explanation except what was offered by him in the course of assessment/quantum proceeding and, therefore, the finding recorded by the authorities in the assessment/quantum proceeding can be relied upon while levying penalty. He further submitted that the finding of the Commissioner of Income Tax that the difference between the assessed income and returned income did not arise due to fraud or gross or wilful neglect on the part of the assessee, stood set aside when the Tribunal had held that the first appellate authority has closed his eyes towards the findings of the Tribunal by merely brushing aside the analysis done by the Tribunal by observing that the matter was debatable. The findings recorded by the Commissioner of Income-tax (Appeals) had spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that the disputed amount is a revenue receipt. No doubt the original assessment proceedings, for computing the tax may be a good item of evidence in the penalty proceedings but the penalty cannot be levied solely on the basis of the reasons given in the original order of assessment. The aforesaid case related to the assessment year 1955-56. It may be mentioned here that the provisions relating to imposition of penalty under section 271(1)(c) of the Act has undergone a sea change after the decision of the Apex Court in the case of Anwar Ali [1970] 76 ITR 696 and Explanations have been added whereunder the onus to prove that the difference between the assessed income and the returned income has not been concealed, has been placed upon the assessee in certain circumstances. The present reference relates to the assessment years 1973-74 to 1976-77 when the Explanation was in force. 19. In the case of Anantharam Veerasinghaiah and Co. [1980] 123 ITR 457 the Apex Court following its earlier decision in the case of Anwar Ali [1970] 76 ITR 696 and Khoday Eswarsa and sons [1972] 83 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y person is less than eighty per cent of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147(reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section." 21. Prior to the aforesaid amendment made by the Finance Act, 1964 the Apex Court in the cases of Anwar Ali [1970] 76 ITR 696 and Khoday Eswarsa and Sons [1972] 83 ITR 369 has held that the burden is on the Department to prove that a particular amount is a revenue receipt. It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income and it cannot be said that the finding in the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omission of the word 'deliberately', it was no longer necessary to establish that the act of concealment or furnishing of inaccurate particulars of such income was deliberate on the part of the assessee. The effect of the newly added Explanation is that for the purposes of levying penalty, two clear-cut divisions have been made, based on variation between the assessed income and returned income. The dividing line is the objective test whether the returned income is less than 80 per cent. of the assessed income or not, reduced by the expenditure incurred bona fide for the purposes of making or earning any income included in the total income, but which had been disallowed as a deduction. Cases where the returned income is more than 80 per cent. of the assessed income have been left out of the purview of the Explanation and they continue to be governed by the law as it existed prior to amendment in 1964. However, cases where the returned income is less than 80 per cent. of the assessed income would fall in the second category and are caught within the mischief of the Explanation. The burden of proof, in such cases, under the amended law, is shifted from the Revenue to the taxpayer. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and evidence before the Tribunal to hold that the assessee had deliberately concealed the particular of his income or deliberately furnished inaccurate particular of such income is equally bereft of force where the Tribunal has relied upon findings recorded in the order in appeal refusing registration to the firm. 27. In the case of P.M.A.P. Ayyamperumal Nadar [1974] 97 ITR 161 the Madras High Court after referring to the decision of the Apex Court in the case of Anwar Ali [1970] 76 ITR 696 and Khoday Eswarsa and Sons [1972] 83 ITR 369 (SC), has held as follows (page 167) : "We are not able to construe the said decisions as lying down that there should be fresh materials at the stage of the penalty proceedings to establish that there has been a deliberate concealment of income and that the materials gathered at the stage of assessment have to be altogether eschewed. It will be clear from the passage above extracted, that the original assessment proceeding is a good item of evidence in the penalty proceedings as well, but that the penalty cannot be levied solely on the basis of the finding given in the order of assessment. Therefore, the materials gathered at the stage of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs. 32. In the case of Mussadilal Ram Bharose [1987] 135 ITR 14 the Apex Court has held as follows (page 20) : "Under the law as it stood prior to the amendment of 1964, the onus was on the Revenue to prove that the assessee had furnished inaccurate particulars or had concealed the income. Difficulties were found in proving the positive element required for concealment under the law prior to the amendment and this had to be established by the Revenue. To obviate that difficulty, the Explanation was added. The effect of the Explanation was that where the total income returned by any person was less than 80 per cent. of the total income assessed, the onus was on such person to prove that the failure to file the correct income did not arise from any fraud or any gross or wilful neglect on his part and unless be did so, he should be deemed to have concealed the particulars of his income or furnished inaccurate particulars, for the purpose of section 271(1). The position is that the moment the stipulated difference was there, the onus to prove that it was not the failure of the assessee or fraud of the assessee or neglect of the assessee that caused the difference shifted to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
