9911796707
TMI Blog1971 (11) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... h was not recorded then and there was recorded later. With regard to the cash deposits the assessee examined some shop-keepers before the Income-tax Officer to prove that they had deposited some amounts with the assessee as security. The Income-tax Officer did not accept the explanation of the assessee though he gave credit for a sum of Rs. 7,200 which was withdrawn previously. He held that the excess of expenditure over available cash on December 12, 1957, and January 16, 1958, and the cash deposits aggregating to Rs. 21,000 were unexplained. He, therefore, rejected the books of the assessee as unreliable and proceeded to determine the assessee's income on the basis of the number of trees, the average yield of sendhi per tree and its average selling price. He assessed the assessee on an income of Rs. 5,00,018 but did not make a separate addition of the items of excess expenditure and cash deposits. The assessee preferred successive appeals to the Appellate Assistant Commissioner and to the Income-tax Appellate Tribunal and the net result of the appeals was that he was assessed on an income of Rs. 1,30,000 in addition to the book profits. In the course of the assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tified in holding that no penalty is leviable ? " Considerable argument was addressed to us on the question of burden of proof and the nature of such burden. We will, therefore, discuss that question first. Several cases were cited before us dealing with "unexplained cash credits". The law is now well settled that in assessment proceedings it is open to an Income-tax Officer to hold that an unexplained cash credit is income of the assessee and no further burden lies on the Income-tax Officer to show that the income is from any particular source. The presumption which an Income-tax Officer may draw that an unexplained cash credit is an income receipt and that it falls under the head "Income from other sources" is a presumption which flows naturally from the circumstance that all facts which can establish the nature and source of the cash credits are peculiarly within the knowledge of the assessee (vide Kale Khan Mohammad Hanif v. Commissioner of Income-tax, Commissioner of Income-tax v. Devi Prasad Vishwanath Prasad and Commissioner of Income-tax v. Krishna Mining Company. However, the finding of an Income-tax Officer in assessment proceedings that an "unexplained cash credit" re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a wide berth in penalty proceedings and that the department was obliged to establish some strong direct link to prove that an unexplained cash credit was an income receipt. It is not so. It should be remembered that even in criminal cases, on occasions, very little other evidence is considered necessary beyond the principal incriminating circumstance. For example, in prosecutions for offences under sections 379 and 411, Indian Penal Code, a criminal court is entitled to draw a presumption of guilt from the mere fact that a person is found in possession of stolen goods soon after the commission of the theft if that person is unable to account for his possession. The first illustration to section 114 of the Evidence Act provides for such a presumption. In such cases the only circumstance in addition to the fact of possession is the proximity of time. It has also been held that in a prosecution for an offence under section 409 an inference of dishonest misappropriation may readily be made where there is a failure to account. In such a case the prosecution is not obliged to prove the mode of conversion. Persons have been convicted of the offence of murder where the evidence against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dits represented income receipts. But, here, we have in addition other circumstances also. There are two unexplained items of cash deficit on December 12, 1957, and January 16, 1958. The explanation of the assessee for these two cash deficits was also found to be false. The income returned by the assessee, namely, Rs. 7,700 was a gross under-estimate when compared with the actual income as finally determined by the Income-tax Appellate Tribunal, namely, Rs. 1,30,000. The books of the assessee were also found to be unreliable. Taking the entirety of these circumstances into consideration, the only legitimate inference which could be drawn was that the cash credits and the cash deficits represented concealed income. Regarding the cash deposits the Income-tax Appellate Tribunal misdirected itself. The Tribunal, instead of considering the entirety of the circumstances, held that there was no positive material to warrant a presumption that the cash deposits were "lateral" to the excess yield of sendhi. The Tribunal did not advert to the circumstances mentioned by us above including the pattern emerging from several unexplained cash credits. We have earlier pointed out how the entirety o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed as deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section." We have, however, not relied on the Explanation notwithstanding the provisions of section 297(2)(g), as the Explanation came into force on April 1, 1964, whereas the assessment had been completed on March 20, 1964. Section 297(2)(g) enables the initiation of penalty proceedings under the Income-tax Act of 1961, even in respect of assessments for earlier years if the assessments are completed on or after April 1, 1962. The provisions of the Income-tax Act of 1961 were, therefore, properly applied to the present penalty proceedings. But the Explanation to section 271(1) was added by the Finance Act of 1964 with effect from April 1, 1964. The assessment having been completed on March 20, 1964, the Explanation would govern the penalty proceedings only if it is treated as a procedural provision. No doubt, a provision dealing with burden of proof h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
