9911796707
TMI Blog2002 (9) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... u. The assessee sold 28 flats. The remaining two flats have been shown by him as a closing stock having an area of 1,073 square feet. The assessee valued the closing stock at Rs. 97,175 at 90.56 per square foot. The Assessing Officer came to the conclusion that there is under valuation of the closing stock. This has not been challenged by the assessee. In its project account, the assessee debited Rs. 2,86,389 on account of the sub-contract for extra work. The Assessing Officer summoned Shri K.K. Patel of Dahanu (alleged sub-contractor) in order to ascertain the genuineness of the claim. He was examined on oath under section 131. The alleged sub contractor categorically denied to have done any extra work. He denied having made any claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment. That, they had agreed the addition of income as they sought to co-operate with the Department. That, they had waived to cross-examine Shri K.K. Patel under a wrong impression. Therefore, they requested the Assessing Officer to drop the penalty proposed under section 271(1)(c). However, the Assessing Officer rejected the request of the assessee. The Assessing Officer found that despite opportunity, the assessee had refused to cross-examine Shri K.K. Patel. The Assessing Officer found that there was no reason for Shri Patel to deny carrying out the work if he had really carried out the work as a sub-contractor. The Assessing Officer, therefore, came to the conclusion that the alleged extra work was not done by the assessee. He, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 203 ITR 792 that penalty could not be sustained without the Assessing Officer invoking the Explanation by giving show cause notice. That, in the present case, no such notice was given. Therefore, the Tribunal, relying on the judgment of the Bombay High Court in P.M. Shah's case [1993] 203 ITR 792, cancelled the penalty. Being aggrieved, the Department has come in appeal. In the meantime, on August 21, 2001, i.e., after the impugned decision of the Tribunal in this case, the Supreme Court in the case of K.P. Madhusudhanan v. CIT [2001] 251 ITR 99 has overruled the judgment of the Bombay High Court in CIT v. P.M. Shah [1993] 203 ITR 792. The Supreme Court has held that the Explanation to section 271(1)(c) was an integral part of section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the burden is on the assessee to prove the circumstances stated in the Explanation and on his failure to prove those circumstances, the assessee is deemed to have concealed particulars of his income or he is deemed to have furnished inaccurate particulars of income. Once the Explanation is held to be an integral part of the section 271(1)(c), then the burden will shift to the assessee and in that light, the Tribunal will have to consider the facts of this case de novo. As stated above, the Tribunal was right when it delivered its impugned judgment. The Tribunal decided the matter on the basis of the judgment of the Bombay High Court in CIT v. P.M. Shah [1993] 203 ITR 792, which judgment is subsequently overruled. We do not wish to express ..... X X X X Extracts X X X X X X X X Extracts X X X X
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