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TMI Blog2001 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. - - - Dated:- 21-8-2001 - Judge(s) : S. P. BHARUCHA., Y. K. SABHARWAL. and BRIJESH KUMAR. JUDGMENT The judgment of the court was delivered by S. P. BHARUCHA J.-The High Court (see [2000] 246 ITR 218) answered in the negative and in favour of the Revenue the following questions : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact, in deleting the penalty levied under section 271(1)(c) of the Income-tax Act ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law and fact, in holding that this is an agreed assessment on the basis of which penalty is not leviable ? 3. Whether, on the facts and in the circumstances of the case, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugust 28, 1989, stating that as sufficient cash balance was not avail able to it on the dates of the transactions, it had obtained hand loans from friends and, as it expected to repay such loans within a short time, no entries were made in the books of account in respect thereof. The letter also stated that since it was unable to furnish evidence for such loans, it offered the amount of Rs. 93,000 as additional income. The assessment was accordingly made treating the sum of Rs. 93,000 as unexplained investment. Penalty proceedings were then initiated against the assessee under section 271(l)(c) of the Income-tax Act, 1961. The Assessing Officer found the assessee's explanation in regard to the loans to be unacceptable and noted that it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Income-tax Officer on assessments in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty-five thousand rupees, the Income-tax Officer shall not issue any direction for payment by way of penalty without the previous approval of the Inspecting Assistant Commissioner : Explanation 1.- Where in respect of any facts material to the computation of the total income of any person under this Act, (A) such person fails to offer an explanation or offers an explanation which is found by the Income-tax Officer or the Appellate Assistant Commissioner to be false, or (B) such person offers an explanation which he is not able to substantiate, then, the amount added or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o section 271(1)(c)." It added : "The Inspecting Assistant Commissioner could not have proceeded to levy the penalty under the Explanation to section 2 7 1(1)(c) in the absence of any initiation of penalty proceedings under the Explanation to section 271(1)(c). These are penalty proceedings and the section must be strictly construed. The assessee, in our view, had no opportunity of meeting the case under the Explanation to section 271(1)(c)." The Bench of the High Court at Bombay that delivered the judgment in the case of P. M. Shah [1943] 203 ITR 792 followed it in the case of CIT v. Dharamchand L. Shah [1993] 204 ITR 462 (Bom). It said : ". . . in the absence of invoking the Explanation specifically, the burden would remain on the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation therein are applied. The High Court at Bombay was, therefore, in error in the view that it took and the Division Bench in the impugned judgment was right. Learned counsel for the assessee then drew our attention to the judgment of this court in Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705. He submitted that the assessee had agreed to the additions to his income referred to hereinabove to buy peace and it did not follow therefrom that the amount that was agreed to be added was concealed income. That, it did not follow that the amount agreed to be added was concealed income, is undoubtedly what was laid down by this court in the case of Sir Shadilal Sugar and General Mills Ltd. [1987] 168 ITR 705 and that, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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