9911796707
TMI Blog1980 (10) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... . This amount of Rs. 98,446 has the following break up: Rs. (i) Value of 84 Swiss made watches 11,384 (ii) Cost of hair and main springs 19 (iii) Cash amount 87,043 (which was arrived at by deducting Rs. 4,639 as recorded in the account books from the total amount of Rs. 91,682 found on raid). The ITO simultaneously started penalty proceedings under s. 271(1)(c) of the Act. As the minimum penalty leviable exceeded Rs. 1,000, the penalty matter was referred to the IAC under s. 274(2) and he being satisfied that it was a definite case of concealment by the assessee imposed penalty of Rs. 99,000, the minimum penalty leviable being Rs. 98,470 according to him. The assessee had in the meantime preferred an appeal against the assessment order to the AAC who confirmed the assessment as made by the ITO. The Appellate Tribunal was thereafter approached by the assessee both against the assessment order as well as the levy of penalty by the IAC. The Tribunal confirmed the order of the AAC as regards the assessment and that of the IAC in so far as the penalty is concerned. The assessee prayed for a reference to this court on the following question of law having arisen o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was not in the financial year 1969-70. Thus, the income could not have been assessed in the year 1970-71, said the counsel. We do not, however, think that any of the dates mentioned by Shri Bhatra is relevant in this regard. The learned standing counsel submitted that the order of assessment or, for that matter, of the Collector, should be regarded as a determination of the ownership; but as the recovery was on March 4, 1970, which was within the financial year 1969-70, the income was rightly assessed in the assessment year 1970-71. The words of the section being " the assessee is found to be the owner ", we are satisfied that the relevant date in this regard would be the date on which the assessee is physically found to be in possession of the money, etc., and this date would not be the one on which the finding about ownership is recorded. Such a finding, whenever recorded, would refer back to the date of recovery. The learned standing counsel gave a befitting illustration in this regard. He stated that if a theft is committed on a particular date but a finding relating to this is given subsequently, may be after one or two years, the commission of the offence of theft would r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 369 (SC), is that the department has merely relied on the falsity of the explanation given by the assessee to impose the penalty which is not sufficient to fasten the penal liability. Both these cases were under the Act of 1922 and it was stated that a finding in the assessment order that the disputed amount represented the income of the assessee cannot be regarded as conclusive for the purpose, of the penalty proceeding which is penal in nature, though that finding would constitute a good evidence. We have noted that the ratio of these two decisions has been followed by the Supreme Court in Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457, which is a case under the new law. Pathak J. has stated in this case that the law understood by the Supreme Court in Anwar Ali's case [1970] 76 ITR 696 is the law even under the new Act. Even this decision of the Supreme Court has not examined the matter in the context of the Explanation to s. 271(1)(c), which was inserted by the Finance Act, 1964, and was holding the field at the relevant time. The material portion of the Explanation reads; " Explanation.-Where the total income returned by any person is less than 80 per cent. of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Explanation. But the Calcutta High Court did not rule out the applicability of the Explanation on this ground. It was rather of the view that there was an absence of fraud or gross or wilful neglect on the part of the assessee in not returning the correct income, as what had happened there was that the assessee, which was a sterling company, claimed certain deductions and loss in consequence of devaluation of the rupee which was not accepted by the assessing officer. It has to be seen in the present case whether the failure on the part of the assessee was or was not due to any fraud or gross or wilful neglect on its part. At this stage it would be useful to refer to a recent decision of the Andhra Pradesh High Court in Addl. CIT v. Krishnamurthy [1980] 121 ITR 326, wherein the nature and scope of proof required of the assessee has been reviewed in the context of the Explanation to s. 271(1)(c), by referring to a large number of cases. The Division Bench has stated, and rightly, that the Explanation has only placed an initial burden on the assessee, which is not absolute, to prove that there was no fraud, etc., on his part in returning the correct income. This burden is aki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion for the purpose for which it is created, though it cannot be extended beyond its legitimate field. We have thought it fit to refer to a decision of this court in F. C. Agarwal v. CIT [1976] 102 ITR 408. The Explanation had also come up for examination in that case. There, the assessee had initially filed returns for the assessment year 1963-64 showing income of Rs. 30,750, which was raised to Rs. 2,74,189 by filing a revised return. Similarly, for 1964-65, a sum of Rs. 36,315 was initially shown as income which was raised to Rs 3,35,181. For 1965-66, the return showing "nil" income was filed, which was said to be Rs. 81,030 subsequently. The Bench took note of the staggering difference between the original and revised returns and was satisfied that the revised returns were not merely the result of inadvertent mistakes or omissions. The totality of the circumstances clearly pointed out, according to the Bench, that it was a case of gross or wilful neglect on the part of the assessee, which the assessee had not been able to disprove. The Explanation to s. 271 (1)(c) was, therefore, held to be applicable. In referring to this decision, we may not be understood to say that, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connection. That was also a case where, under the deeming provision of s. 69A of the Act, the assessee was assessed on a sum of Rs. 60,000. A penal proceeding had also been initiated wherein the assessee concerned denied that the addition represented his concealed income. What happened there was that in the appeal against the assessment before the AAC the assessee had conceded that the amounts belonged to him and might be assessed in his hands. The IAC rejected the contention that the addition did not represent the concealed income and imposed penalty. The Tribunal, however, set aside the penalty order. On reference, it was held by the Gujarat High Court, that the revenue could assess the sum of Rs. 60,000 on the basis of the admission made by the assessee, but the same did not discharge the onus on the revenue of proving that the amount of Rs. 60,000 represented the income of the assessee of the particular financial year. The admission of the assessee was not held to be that the amount was his income in the particular year in question. It was further stated that it had not been established by the revenue that there was accretion to the net wealth of the assessee during the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X
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