9911796707
TMI Blog1983 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... n 271(1)(c) of the Income-tax Act ?" The short facts, essential for the decision of these applications, are these: The assessee, in all these cases, is the same. He is an individual. He has three sources of income : (i) liquor business, (ii) chemist shop, and (iii) property. The corresponding accounting years for the above assessment years ended on March 31, 1967, March 31, 1968, and March 31, 1969, respectively. The table below shows the income returned by the assessee, the income finally assessed in the second appeal by the Tribunal as also the difference between the income assessed and the income returned under each source in the respective three assessment years : --------------------------------------------------------------------------------------------------------------------------------------------------- Assessment Income Income finally Difference Year returned assessed of income --------------------------------------------------------------------------------------------------------------------------------------------------- 1967-68 Rs. Rs. Rs. 1. Property income Nil 1,735 1,735 2. Chemist shop 6,368 12,919 6,551 3. Liquor shop 16,977 40,62 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of the assessee ; that in respect of property income, the omission to return it was due to a slip and was not a deliberate concealment and with regard to unexplained cash credits, the assessee contended that the creditors having been produced, the addition was only due to rejection of the assessee's explanation and as such did not attract any penalty. The Inspecting Assistant Commissioner found that the assesse was returning income year after year on estimate basis and was accepting large additions and held that non-compliance with notice under section 143(2) of the Act and non-maintenance of acceptable accounts revealed a pattern and a design on the basis of which it must be held that the assessee has concealed the income or furnished inaccurate particulars. The Inspecting Assistant Commissioner had also taken into account the additional evidence which was available with him and it was that on February 10, 1974, when there was a raid and search of the residential premises of the assessee and his brother, a sum of Rs. 10,52,988 was discovered and that two of the creditors of the assessee who were present at that time were found to be the assessee's employees getting Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that year. The Tribunal also observed: " these proceedings have concluded, then, we would have had further information as to the claim of the assessee regarding the nature of these amounts seized in 1974. As yet, however, there is no material to link the monies seized in the year 1974 with the income earned in the earlier assessment years. We must, therefore, come to the conclusion that the facts relating to the seizure of the money from the premises of the assessee in 1974 cannot be relied on by the Revenue in drawing any adverse inference for these assessment years. We must, therefore, proceed to test each addition in the assessments to see whether the assessee had discharged the burden cast by the explanation." With regard to the failure to return property income for the assessment year 1967-68, the Tribunal came to the conclusion that it was an inadvertent omission and not a deliberate concealment. The reason assigned for this conclusion by the Tribunal is that the particulars of the income from property for the subsequent years were returned by the assessee prior to the assessment for this year and that "the assessee appears to have come out with entire particulars when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old that the assessee had discharged the burden cast by the said Explanation." The Department then made an application before the Tribunal under section 256(1) of the Act for referring the question extracted in paragraph 2 of this order contending that this question arises as a question of law out of the order of the Tribunal dated September 11, 1975, quashing the penalty. The Tribunal, vide its order dated September 21, 1976, rejected these applications, holding that no question of law arises out of its order dated September 11, 1975. Hence, the present applications have been made under section 256(2) of the Act. The Tribunal, in its order, on an application under section 256(1) of the Act, after giving a brief resume of the facts and findings of the Tribunal's order dated September 11, 1975, said that it shows that it was on balance of probabilities that the Tribunal held that the onus that lay on the assessee under the Explanation to section 271(1)(c) of the Act stood discharged on the facts and in the circumstances of the case and, as such, it is purely a question of fact and no question of law arises. Before we proceed to dwell on the question whether a question of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question is of an academic nature, e.g., where it is concluded by a judgment of the Supreme Court, the position would be different. It is also to be noted that a reference cannot be refused merely because this court has taken the same view on the question as the Tribunal. We now proceed to decide the question whether a question of law arises in the instant case from the order of the Tribunal dated September 11, 1975, bearing in mind the aforesaid legal position. At the outset, we may point out that from the resume of the facts and findings of the authorities below, it is apparent that according to the Inspecting Assistant Commissioner, the subsequent event, that is, the seizure of the sum of Rs. 10,52,988 in the raid and search at the assessee's residence and the statements of his employees regarding their financial status, indicating the inability to advance big sums of money to the assessee, which the assessee had claimed that they had advanced to him, can be taken into account in the matter of the imposition of penalty in question; whereas according to the Tribunal, for the reasons stated by it in its order dated September 21, 1975, which have been summarised in paragraph 11 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are not concerned with the question whether the point has to be answered in favour of the Department or against the Department. The limited question before us is whether a question of law arises or not. It was also urged by the learned counsel for the assessee that since the Department, in its application under section 256(1) of the Act, had not proposed the question that the Tribunal was wrong in law in refusing to take into account the subsequent event of raid wherein the sum of Rs. 10,52,988 was found and the statements of two of the employees creditors of the assessee were, recorded, the Tribunal cannot be required to refer such a question. The argument of the learned counsel is devoid of substance. The ultimate effect of taking into account or refusing to take into account the evidence in question is on the imposition of penalty and therefore, the question that was proposed by the Department, as extracted hereinabove in paragraph 2 of this order, is a comprehensive one, so as to include within its ken this question also. The learned counsel for the Department urged that the findings of the Tribunal that the failure to return property income was an inadvertent omission a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout interest. Thus, in view of these circumstances, we are unable to accept the plea of the learned representative of the assessee that the assessee had discharged the onus cast upon him to prove the genuineness of the entries. " The finding of the Tribunal in the penalty appeal is that in its opinion, failure to return property income was an inadvertent omission and not a deliberate concealment; that for the sum of Rs. 25,000, the assessee's stand was not shifting or contradictory as to the nature and source of the cash credits and that on producing the creditors, the assessee had discharged the burden cast on him by the Explanation to section 271(1)(c) of the Act. From the above discussion, it is apparent that the Tribunal has, on accepting that very explanation which was discarded in quantum appeal, held that the assessee has discharged the burden that was cast on him under the Explanation to section 271(1)(c) of the Act. It is also pertinent to note that the Tribunal's view is that the production of the creditors, from whom allegedly the assessee had taken the loans, ipso facto discharged the burden that was on the assessee regarding the sum of Rs. 25,000 under the Explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return, for, in such a case, the omission or wrong statement in the return is known to the assessee from the very beginning and is not later discovered by him ...... " (emphasis supplied) In the light of this observation, a legal question arises in the instant case, that whether the Tribunal is right in law in holding that since the assessee come out with the entire particulars of the income from property in the assessment year 1967-68, when the omission was brought to his notice and had returned the property income for the subsequent year 1967-68 was complete, he cannot be held guilty of concealment. With regard to the income from liquor business as also the chemist shop business, it is argued by the learned counsel for the Department that the view taken by the Tribunal in the penalty proceedings that since the income from these businesses was finally assessed on estimation under section 145(1) of the Act and as there is no material to indicate that there was inflation of expenses and suppression of sales, the burden cast by the Explanation must be held to be discharged, is erroneous in law. The learned counsel for the assessee, in his argument in counter, submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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