9911796707
TMI Blog1981 (5) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... 27,305. The assessment was completed at Rs. 1,59,728. In the assessed income the ITO included Rs. 1,08,150 as income from undisclosed sources in respect of cash credits. He also disallowed the interest of Rs. 38,000. Out of the addition of Rs. 1,08,150 an addition was made of Rs. 1,03,500 on peak basis in respect of cash credits appearing in the names of the creditors: (i) Vishandas, (ii) S. Amarlal, (iii) N. Kenailal, and (iv) P. Prabhudas. The ITO held that the assessee could not prove the genuineness of these cash credits and that the assessee had also made a disclosure petition in which these credits had been disclosed as the income of the assessee. An addition of Rs. 4,000 was made in respect of the credit appearing in the name of Smt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to prove the genuineness of the loans. The IAC, however, took the view that the admission made by the partners that the credits were their own undisclosed income was an admission by the assessee and that it was futile to summon the creditors. He, therefore, held that the credits appearing in the names of the aforesaid creditors represented the concealed income of the assessee. He took a similar view with respect to the addition of Rs. 4,000 in the case of Smt. Rukmini Devi. He also held that by claiming the interest of Rs. 3,800, the assessee set up a bogus claim and thereby concealed an income. The IAC held that the assessee had committed default under s. 271(1)(c) and imposed a penalty of Rs. 55,000. Being aggrieved by the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of the firm while making the admission of the cash credits as their concealed income. According to the Tribunal, the next point for consideration was whether the assessee had a right to show that the admission in the disclosure petitions were wrongly made under certain exceptional circumstances and that the credits were really genuine. The Tribunal referred to the decision in the case of Krishan Lal Shiv Chand Rai v. CIT [1973] 88 ITR 293 (P & H), wherein it was held that it was an established principle of law that party was entitled to show and prove that an admission made by him previously was in fact not correct and true and it was incumbent upon the IAC to afford the assessee full opportunity to prove his assertions and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unallowable expenditure as the credits really belonged to the partners did not arise as, on account of the refusal of the IAC, the assessee did not have an opportunity to prove that the loans really belonged to the creditors in whose names those appeared. The Tribunal observed that neither the ITO nor the IAC accepted that the loans really belonged to the partners and not to the assessee-firm. The Tribunal was of the view that in those circumstances the penalty order could not be sustained and the Tribunal accordingly cancelled the penalty order. " Now, it appears that the Tribunal treated that the disclosure petition would be an admission on behalf of the firm. On this aspect, the Tribunal was in favour of the assessee. The Tribunal also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specially in a quasi-criminal proceeding of the penalty nature. In view of the fact and the finding, which finding of fact has not been specifically challenged in the question posed before us, in our opinion, the decision of the Tribunal was correct and the question must be answered in the affirmative and in favour of the assessee. Reliance was placed on certain observations of the courts. Reference was made to the observations of the Delhi High Court in the case of Durga Timber Works v. CIT [1971] 79 ITR 63 (Delhi) as well as to the observations of the Division Bench of this court in the case of CIT v. P. B. Shah & Co. (P.) Ltd. [1978] 113 ITR 587 (Cal) but inasmuch as the problems in these two cases were practically distinct and differ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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