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TMI Blog1975 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... dings under section 34 of the Indian Income-tax Act, 1922, in the course of which the three creditors appeared before him and were examined. They admitted having advanced the moneys to the assessee. They, however, did not produce any books of account to support the advances claimed to have been made by them as loans. The Income-tax Officer did not accept the explanation of the assessee or the evidence of the creditors and treated the said amount of Rs. 39,302 as the assessee's income from undisclosed sources. The Income-tax Officer also started proceedings for imposition of penalty under section 28(1)(c) of the Indian Income-tax Act, 1922, and imposed a penalty of Rs. 15,000. He relied on the fact that in the assessment proceedings the Appellate Assistant Commissioner had confirmed the findings of the Income-tax Officer that the cash credits were not genuine and the amount represented the assessee's income from sources not disclosed. Against this order of penalty the assessee appealed before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner again relied on the assessment order as also the orders of the Income-tax Appellate Tribunal in the appeal from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cealed particulars of his income and there can be no justification for imposition of penalty under section 28(1)(c) in the circumstances. We hold that the imposition of penalty was not justified in this case. We rely on the judgment of the Calcutta High Court in Commissioner of Income-tax v. Anwar Ali [1967] 65 ITR 95 (Cal) which has been followed by the same High Court in Commissioner of Income-tax v. Satish Churn Law [1969] 71 ITR 275 (Cal). The Tribunal allowed the appeal of the assessee. From this order of the Tribunal the following questions have been referred to us under section 66(2) of the Indian Income-tax Act, 1922 : " 1. Whether, on the facts and in the circumstances of the case, after the order in the assessment proceedings regarding addition to income from undisclosed sources had been upheld the entire onus in penalty proceedings still lay on the income-tax department to prove that the assessee had concealed particulars of his income ? 2. Whether, on the facts and in the circumstances of the case, there was any evidence before the Tribunal to disprove the finding of the income-tax authorities that the amounts represented the assessee's income or that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation furnished by the assessee was disbelieved in the assessment proceedings. The only difference is that in the instant case not only the explanation of the assessee has been disbelieved, but the evidence produced by the assessee has been rejected. This may be a distinction. But this is a distinction without a difference. The fact remains that in the penalty proceedings no further material was produced or considered by the revenue except what was found in the records of the assessment proceedings. The Supreme Court has specifically laid down in Anwar Ali's case [1970] 76 ITR 696, 700, 701 (SC) as follows : " As has been rightly observed by Chagla C.J. in Commissioner of Income-tax v. Gokuldas Harivallabdas [1958] 34 ITR 98 (Bom), the gist of the offence under section 28(1)(c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and, therefore, the department must establish that the receipt of the amount in dispute constitutes income of the assessee. If there is no evidence on the record except the explanation given by the assessee, which explanation has been found to be false, it does not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the department and on those findings no question of law arose for reference. Penalty proceedings being penal in character, the department must establish that the receipt of the amount in dispute constitutes income of the assessee. Apart from the falsity of the explanation given by the assessee the department must have before it before levying penalty cogent material or evidence from which it could be inferred that the assessee has consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that the disputed amount is a revenue receipt. No doubt, the original assessment proceedings for computing the tax may be a good item of evidence in the penalty proceedings but penalty cannot be levied solely on the basis of the reasons given in the original order of assessment. " and confirmed the decision of the Mysore High Court. Mr. J. C. Pal also cited another Supreme Court decision in the case of Commissioner of Income-tax v. N. A. Mohamed Haneef [1972] 83 ITR 215 (SC). This decision of the Supreme Court does not take the matter any further and the facts and circumstances in that case appear to be of rather s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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