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TMI Blog2002 (11) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... he Department carried out certain investigations. During the course of enquiry thus made, the following four cash creditors denied having made loans to the assessee which as per the assessee s books of account were as follows : Name of the party Assessment year Amount involved (Rs). S. D. Parikh 1980-81 25,000 M. M. Goel 1980-81 25,000 Harish Trading Corporation 1982-83 25,000 Chandrakant P. Shah 1982-83 50,000 By application dated June 29, 1983, the assessee filed a petition under section 273A before the learned Commissioner of Income-tax, Bombay City VIII, Bombay, declaring additional income of ₹ 35 lakhs and odd which included the surrender of claim of loans received in the names of various parties. Thereafter notices under section 148 were served upon the assessee for a large number of assessment years. The learned Commissioner of Income-tax, how ever, vide his order dated October 29, 1985 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing regarding the non-genuineness of the loans. The assessee on his own filed a settlement petition offering ₹ 15 lakhs for taxation. Further, since the assessee has surrendered all the loans which have not been treated as genuine, the assessee s settlement petition may be treated as full and true. In the report dated September 13, 1985, of the Income-tax Officer placed on record again it has been mentioned that the disclosure made is full and true and some of the loans are genuine. As pointed out by learned counsel for the assessee, the assessee has not been allowed capitalisation of this additional amount subjected to tax. The assessee has paid taxes on the additional income disclosed of more than ₹ 15 lakhs. A perusal of the reports of field/investigation officer shows that they were satisfied that the disclosure was voluntary and made before any enquiry in this direction of loans was conducted. The assessment orders were made only on the basis of the settlement petition, there is nothing in them to show that besides this petition certain other material vis-a-vis these loans was detected by the Revenue or found in the course of action under section 132. Excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spite of these details the assessee had agreed to the assessment of these loan amounts as representing the income of the assessee with a view to buy peace and avoid litigation. However, in respect of producing the parties and to cross examine them, the assessee pleaded inability on the ground that there was lapse of about 10 to 12 years from the date of transaction. On these facts, the learned Assessing Officer held that the assessees failed to avail of the further opportunity which was granted to the assessee in terms of the Tribunal s order dated March 15, 1990. He therefore levied penalty under section 271(1)(c) for both these assessment years amounting to ₹ 73,584 for the assessment year 1980-81 and Rs. 53,849 for the assessment year 1982-83. The Assessing Officer, while he imposed the penalty for the assessment year 1982-83 at the minimum rate prescribed, levied penalty for the assessment year 1980-81 at the maximum rate, the minimum imposable for that year being only ₹ 36,792. Aggrieved by the penalty orders, the assessee preferred appeal before the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) concurred with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal s order had been passed on March 15, 1990, whereas the orders of penalty had been made on March 31, 1992. Therefore, both these orders were barred by limitation of time. In this connection, the learned Authorised Representative particularly emphasised the order of the Tribunal reported in Shardaben v. Asst. CIT [2000] 75 ITD 274 (Ahd) and the Supreme Court judgment in the case of K. M. Sharma v. ITO [2002] 254 ITR 772. The learned Departmental Representative strongly relied upon the orders of the learned Assessing Officer and the learned Commissioner of Income-tax (Appeals) in this respect. He argued that in this case enquiries were preceded by surrender of the amounts by the assessee. When the assessee realised that the cash creditors had refuted the claim of the assessee and he was thus caught, instead of making an issue of it at that very stage the assessee preferred to surrender the amounts by way of additional income. It was for this reason that the learned Commissioner of Income-tax did not accept the petition made by the assessee under section 273A to be voluntary and rejected the same. The assessee was at liberty to have his say at that stage itself but he c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion with a view to prove the assessee s bona fides on account of lapse of time and there being search in the case of the assessee. There is not even a hint in the assessee s letter that it required more time to deal with the matter. The assessee also did not request the Assessing Officer to enforce the attendance of the parties for cross-examination. He simply abandoned the claim of cross-examination before the Assessing Officer. We therefore do not see much force in the contention of the assessee that copy of the statement had been given only on March 20, 1992. During the course of hearing before us, the learned Authorised Representative of the assessee placed considerable reliance on the judgment of the Supreme Court in the case of CIT v. Suresh Chandra Mittal [2001] 251 ITR 9. We find that in that judgment the Supreme Court have only held that given the facts and circumstances of that case, interference with the order of the High Court was not called for. This judgment of the Supreme Court has to be read with their judgment in the case of K. P. Madhusudhanan v. CIT [2001] 251 ITR 99 (SC), that after insertion of the Explanation, the burden to prove that there was no concealm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee s plea relating to limitation of time. During the course of hearing before us, the learned Authorised Representative of the assessee took an alternative plea that the Assessing Officer was not justified in levying penalty at the maximum rate. We find that the penalty for the assessment year 1982-83 has been imposed at the minimum prescribed rate and therefore no interference is called for on this ground. However, for the assessment year 1980-81, the same Assessing Officer has levied penalty at the maximum prescribed rate for which we do not see any particular justification. Having regard to the facts and circumstances of the case we are of the view that it would suffice if the penalty for the assessment year 1980-81 is also levied at the minimum prescribed rate. We direct accordingly. In the result, while assessee s appeal in I. T. A. No. 2418/Bom. of 1995 for the assessment year 1980-81 is partly allowed, the appeal in I. T. A. No. 2419/Bom. of 1995 for the assessment year 1982-83 is dismissed. G. C. Gupta (Judicial Member).-I have perused the proposed order of my learned Brother carefully but could not persuade myself to agree with the conclusions as arrived at by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir address and their confirmation letter and PAN number have been filed before the Assessing Officer during the course of assessment proceedings and moreover the addition to the total income was offered by the assessee purely to buy peace and avoid litigation and therefore requested not to impose penalty under section 271(1)(c). The Assessing Officer on March 20, 1992, gave the copies of the statements of the four creditors to the assessee. It is pertinent to note here that the case of penalty was going to be time barred on March 31, 1992, and the copy of statements of the four creditors were given only on March 20, 1992, to the assessee. In these circumstances, the assessee pleaded its inability on the ground that there was lapse of about 10-12 years from the date of transaction. The Assessing Officer rejected the contention of the assessee and held that the assessee has failed to avail of the opportunity which was granted to the assessee in terms of the Tribunal s order dated March 15, 1990. He therefore levied penalty under section 271(1)(c) for both these assessment years amounting to ₹ 73,584 for the assessment year 1980-81 and ₹ 53,849 for the assessment year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings in the year 1984 and was bound to furnish the copies thereof to the assessee and the specific directions of the Tribunal in this regard were not complied with. It was only ten days prior to the passing of the penalty order that the Assessing Officer furnished the copies of the statements of the four creditors and asked the assessee to produce the parties and to cross- examine them. In these circumstances the assessee pleaded its inability on the ground that there was a lapse of about 10-12 years from the date of transactions. Considering the time allowed by the Assessing Officer to produce the four creditors for cross-examination after a lapse of 10-12 years from the date of transaction, I have no hesitation to hold that no adequate opportunity of hearing was allowed to the assessee as per the directions of the Tribunal. In these facts it cannot be said that the assessee did not avail of the opportunity to cross-examine the creditors. By not complying with the directions of the Tribunal in letter and spirit, the order of the Assessing Officer levying penalty for concealment of income is liable to be cancelled on this count alone. The loans in question were accepted per acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is allowed. In the result the appeals of the assessee are allowed. Order of reference to Third Member Since there is a difference of opinion vis-a-vis conclusions arrived at in I. T. A. Nos. 2418 and 2419/Bom of 1995 in the case of Kumar Agencies (India) v. Asst. CIT, Circle-19(2), Bombay, involving assessment years 1980-81 and 1982-83, we are of the opinion that the following point of difference is required to be referred to the Third Member and for the purpose we direct that the file be put up to the hon ble President : Whether, on the facts and in the circumstances of the case and in terms of the order of the Income-tax Appellate Tribunal, Bombay Bench C , Bombay, dated March 15, 1990, in the case of the assessee, the learned Commissioner of Income-tax (Appeals) was justified in upholding the orders of penalty under section 271(1)(c) made by the Assessing Officer for the assessment years 1980-81 and 1982-83 ? ORDER OF THIRD MEMBER M. K. Chaturvedi (Vice-President). -This appeal came before me as a Third Member to express my opinion on the following question : Whether, on the facts and in the circumstances of the case and in terms of the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmations. Parties were assessed to tax. The transactions were made through brokers. The payments were made through account payee cheques only. The assessee surrendered this amount only with a view to buy peace and to avoid litigation. When the Assessing Officer granted opportunity to the assessee in terms of the Tribunal s order dated March 15, 1990, the assessee expressed its inability to produce the parties because of lapse of about 10 to 12 years from the date of transaction. It was also submitted that the assessee was not directly known to the parties. The transactions were through brokers. On this factual backdrop only the assessee did surrender the amount. The Assessing Officer therefore levied penalty for both these assessment years amounting to ₹ 73,584 for the assessment year 1980-81 and ₹ 53,849 for the assessment year 1982-83. Penalty for the assessment year 1982-83 was levied at the minimum rate prescribed. For the assessment year 1980-81, it was levied at the maximum rate prescribed. The learned Accountant Member directed the Assessing Officer to levy penalty for the assessment year 1980-81 at the minimum rate. He maintained the penalty for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandra Mittal [2001] 251 ITR 9 (SC). According to Black s Law Dictionary, false means not true. The word false has two distinct and well-recognized meanings : (i) intentionally or knowingly or negligently untrue ; (ii) untrue by mistake or accident. A thing is called false when it is done, or made, with knowledge, actual or constructive, that it is untrue or illegal, or is said to be done falsely when the meaning is that the party is in fault for its error. A statement is false if it was untrue by the person making it or causing it to be made. In wider sense, the word false will embrace all types of falsehoods intentional or unintentional but in narrower sense it covers only intentional falsehood. In Explanation 1 to section 271(1)(c), the word is used as an ingredient of penal offence and, therefore, a guilty element, is sine qua non, to constitute the falsehood. A person is said to give false evidence, if he, (i) legally bound by an oath or by an express provision of law to state the truth, or (ii) being bound by law to make a declaration upon any subject, (iii) makes any statement, which is false, and (iv) which he either knows or believes to be fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be false, then the authority can proceed against the assessee. In the case of CIT v. Suresh Chandra Mittal [2000] 241 ITR 124 (MP) action under section 132 was taken against the assessee. This led to reopening of the assessment. The assessee revised the returns. The Assessing Officer levied the penalty rejecting the contention of the assessee that revision was made suo motu and additional income was offered to buy peace and to avoid litigation. When the matter was carried to the Tribunal, the following view was taken (page 125) : The assessee had no chance of carrying through his explanation and the Assessing Officer too did not record any finding as to the acceptability or otherwise of the explanation of the assessee. Under these circumstances the proviso to Explanation1 to section 271 is not attracted. The Revenue did not at all discharge the burden to prove that there was concealment of income by the assessee. It simply rested its conclusion on the act of voluntary surrender by the assessee, which obviously was done in good faith and to buy peace. The Tribunal placed reliance on the decision of the apex court rendered in the case of Sir Shadilal Sugar and General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount for addition. Penalty proceedings were initiated. The Assessing Officer did not accept the explanation of the assessee. Penalty was imposed. The Tribunal cancelled the penalty on the ground that in the notice initiating penalty proceedings, the assessee was not intimated about the proposed action under Explanation 1(B) to section 271(1)(c). The High Court held that the imposition of penalty valid. The apex court affirmed the decision of the High Court. The apex court has held that by reason of the addition of the Explanation to section 271(1)(c), the view taken in the case of Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) can no longer be said to be applicable. The implication of this decision is that if the case of the assessee comes within the ken of Explanation, then shelter of Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC), decision cannot be taken. However, if the assessee s explanation is found not to be false and bona fide is proved, then there can be no penalty for concealment. The apex court in the case of Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai, AIR 1976 SC 1455 (at pages 1467-68), has held that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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