9911796707
TMI Blog1980 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ey loan account with the Central Bank of India, Coimbatore. The ITO made a detailed scrutiny of the accounts and found that there were certain discrepancies in the stocks as shown in the assessee's books and as declared to its bankers. In these penalty proceedings, we are concerned only with the discrepancies in the key loan account. In the assessee's accounts, the closing stock of Karunganni kapas was shown as 33,273 lbs., whereas as per the statement given to the bank, the closing stock was 1,82,000 lbs., showing a difference of 1,48,727 lbs. On the ground that the assessee would not have declared to the bank such figures of non-existent stock and that the bankers also would not have accepted such declaration if such stocks were not reall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o grounds. Firstly, from the mere fact that the assessee's explanation that the entries in the key loan account did not reflect actual stock, that they were mere entries made only for the purpose of accommodation given by the bank and that purchases were never made, was not acceptable, was not enough to hold that there was concealment of particulars of income or inaccurate furnishing of particulars of such income within the meaning of the Act and that there should be some positive evidence in addition to the rejection of the explanation. Secondly, though in the assessment appeal, it was found that the purchase of the stock was not reflected in the books of the assessee, there was no evidence to show that the purchase consideration was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of stock in the quantum appeal relying on the statement furnished to the bank and that the purchase consideration was not reflected in the account books and were paid out of the funds outside the accounts, it erred in holding that there was no evidence that the purchase consideration came out of the funds of income nature or that there was no concealment attracting the penalty provision. It is now well settled that from the mere fact that the explanation of the assessee was found to be false in the assessment proceedings, it would not follow that the ingredients necessary for levying a penalty under s. 271 (1)(c) of the Act are established. Though it is not necessary in all cases that fresh material should be produced in the penal proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt, the Bombay High Court held that since the basis of penalty proceedings was the declaration of stock by the assessee to the bank and there was no admission of concealment of income as such on the part of the assessee either during the assessment proceedings or during the penalty proceedings and there being no further evidence available, it cannot be regarded as a case where there was any deliberate concealment or contumacious conduct on the part of the assessee attracting penalty. The decision in CIT v. Sohan Lal Brij Lal [1979] 120 ITR 901 (Raj) was also a case of discrepancy between the stock reported to the bank and that recorded in the books of account. Though the addition on account of the discrepancy was sustained in the quantum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual stock and that they were mere entries made as a result of accommodation given by the bank. Though this explanation was found not acceptable, there was no evidence available either relating to the actual purchase or the sale of any stock said to have been suppressed. In fact, even the department did not seem to have verified with the bank as to whether they have actually verified the stock at any stage. In the circumstances, therefore, we cannot say that the Tribunal went wrong in holding that the penalty is not impossible on the first ground mentioned earlier. Since on this ground the order of the Tribunal could be sustained, it becomes unnecessary for us to decide as to whether the finding of the Tribunal that the purchase considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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