9911796707
TMI Blog1984 (7) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,600 in the bank on 17-6-1975 as mentioned in the cash book. The ITO therefore, came to the conclusion that it clearly established that the assessee first introduced its own unexplained money on 17-5-1975 and then withdrew the same on 17-6-1975 from the cash book under the fictitious name of Punjab and Sind Bank in both the cases. It was stated before the ITO by the assessee in its letter dated 17-5-1975 that out of cash introduced on 17-5-1975 amounting to Rs. 21,600 the peak amount utilised from 7-5-1975 to 17-6-1975 was only Rs. 10,876. It was further urged that addition of Rs. 10,000 was made in the last year while finalising the assessment. The ITO had not accepted the above explanation. According to him, the amount introduced on 17-5-1975 of Rs. 21,600 under the garb of 'drawn from the Punjab and Sind Bank' remained unexplained. He, therefore, treated the amount of Rs. 21,600 as the assessee's income from undisclosed sources in view of the provisions contained in section 68 of the Act. Before the AAC, the assessee did not dispute the facts relating to the cash credit as mentioned in the order of the ITO. It was, however, contended that entries made in the cash book in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount introduced. From perusal of copy of voluntary disclosure made, we find that on 31-3-1977 Rs. 10,000 were disclosed by the assessee, though his status of declarant is not available on the said copy but it seems to be in respect of the assessee-firm itself as permanent account No. given is 6914 on the said declaration and also as borne out by record. Undoubtedly the said amount has been shown as cash. As per observations of Income-tax Officer that the peak amount utilised was to the extent of Rs. 10,876 on 30-5-1975 there is no dispute. We are in agreement with the observations of the Appellate Assistant Commissioner that a mistake of the employee could not further the case of the assessee because it was a sum of Rs. 10,876 already utilised out of the said cash credit. Regarding correlating a sum of Rs. 10,000 to voluntary disclosure, if it were so, at least in the course of voluntary disclosure the assessee could voluntarily come forward as long as on 31-3-1977 that this amount was partly in favour of bogus credit in the name of Punjab and Sind Bank because the assessment order is dated 7-3-1979. 8. Regarding utilisation of intangible additions, we are convinced with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to consider, from an overall consideration of all the relevant facts and circumstances, whether the unexplained cash credits would be reasonably attributed to the pre-existing fund of concealed income or they were reasonably explained by reference to the concealed income earned in the relevant year....' Instant is a case where when we consider from an overall consideration of all the relevant facts and circumstances whether unexplained cash deposit and cash credit could reasonably be attributed to the pre-existing funds of concealed income or they are reasonably explained by reference to the concealed income earned in the relevant year, we find the reply emanating from the fact is negative. All the relevant facts and circumstances in this case on this issue go against the assessee. 9. Before parting with the issue, we also find that intangible additions are made in the case of the firm, a registered partnership firm, where division of profits in favour of intangible additions is a very big presumption because it is a case of registered partnership firm and the credit under the circumstances in the case of firm could not be explained out of such additions and also in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He, therefore, held that the judgment of the Hon'ble Supreme Court in the case of Anwar Ali was not applicable to the facts of the case. Regarding that the mistake was a bonafide one on the part of the persons who maintained the books of account, the AAC observed that this was already found to be incorrect, as the assessee itself admitted that funds to the extent of Rs. 10,876 were utilised out of these funds introduced in the books of account and this amount could be so utilised only when it was introduced earlier. It was, therefore, not merely an entry by mistake but actual cash was introduced. Regarding the explanation that these were out of voluntarily disclosed income of Rs. 10,000 and intangible addition of Rs. 10,000 made in the assessment year 1975-76, the AAC held that the narrations under which the amount was introduced and withdrawn belie the explanation of the assessee. Further, there is no basis for this explanation inasmuch as no co-relation between the amount disclosed and the amount introduced in the books of account was available. He also observed that the assessee was a partnership concern. Whatever funds representing the intangible additions in the earlier years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars of income and not for furnishing inaccurate particulars of such income. He also urged that in view of the deeming provisions as contained in part (B) of the said Explanation the charge had to be specific and not illusory as in the present case. Therefore, the penalty so levied was void ab initio. The learned counsel for the assessee also urged that a question might arise that if at all the additions and disallowances are to be covered by the expression 'concealment of particulars of income' in view of part (B) of Explanation 1, the alternative charge of furnishing inaccurate particulars of income as mentioned in section 271(1)(c) will become redundant. Lastly, he urged that on the basis of section 68, the amount represented in the cash credit of Rs. 21,600 could be deemed to be the income of the assessee but it could not be treated as such for purposes of levying penalty under section 271(1)(c). For this proposition, he relied on the decision of the Calcutta High Court in CIT v. Bhuramal Manikchand [1981] 130 ITR 129. 6. Shri R.K. Bali, the learned senior departmental representative, on the other hand, contended that in the present case, the case of the revenue w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income but required to be included under section 64 of the Act attracted the applicability of section 271(1)(c). It was also a deeming provision. He also relied on the judgment in 103 ITR 404 (Ori.) (sic). Reliance was also placed on the judgments of the Hon'ble Punjab and Haryana High Court in CIT v. Behari Lal Pyare Lal [1977] 107 ITR 587, Hindustan Tools Mfg. Co. v. CIT [1976] 102 ITR 174 and CIT v. Aya Singh Ishar Singh [1973] 92 ITR 182 where non-disclosure of profits under section 41(1) of the Act was held to be concealment of income. He also referred to another decision of the Hon'ble Punjab and Haryana High Court in the case of Ambala Electric Supply Co. Ltd. [IT Reference No. 64 of 1976, dated 3-2-1981] upholding the penalty for concealment of deemed income under section 41(1). 7. We have very carefully considered the rival submissions. It may be pointed out that the issue regarding the charge being illusory under similar circumstances came up for consideration before the Chandigarh Bench of the Tribunal in the case of Gulati Stores [IT Appeal No. 354 of 1982] for the assessment year 1977-78. The contention of the assessee was negatived by the Tribunal vide its orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the explanation that the assessee had cash of Rs. 10,000 available with him which was subsequently disclosed under the Voluntary Disclosure Scheme in December 1975 and again intangible additions of similar amounts were made in the past which were also available with the assessee. It is, therefore, a case where the assessee concealed the particulars of his income and also furnished inaccurate particulars of such income. Then we have to consider whether the assessee had any doubt in its mind about the charge levied against it so as to make it illusory. Show-cause notice as to why penalty under section 271(1)(c) should not be imposed was duly served upon the assessee. The assessee never raised an objection that the charge was illusory. On the contrary it furnished the explanation which clearly shows that the assessee fully understood as to what was the charge. Again, whether it is concealment of particulars of income or furnishing inaccurate particulars of such income, the end result in both the cases is suppression of income which was otherwise includible in the total income of the assessee. We, therefore, do not find any merit in the contention made on behalf of the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve is deemed to be the income of the year in which such asset is sold, etc., to the extent it was allowed in earlier years. In fact, there is no real income but by operation of law it is taken as assessee's income equivalent to the amount of depreciation already allowed. Their Lordships have held that where it is treated as income even by virtue of the deeming provisions, it has to be declared by the assessee in the total income. Failure to do so will attract penalty under section 271(1)(c). 'Income' has been defined under section 2(24) of the Act. The definition is inclusive and not exhaustive. It shall, therefore, include incomes whether real or deemed which are assessable under the Income-tax Act. There is no dispute that the cash credits are assessable as income under the deeming provisions of section 68. In the ratio of the decisions of the Hon'ble Punjab and Haryana High Court and of the Orissa High Court referred to above, we are of the opinion that provisions of section 271(1)(c) are attracted in cases of deemed income assessed under section 68. We, therefore, do not find any merit in this contention made on behalf of the assessee as well. 9. Another point raised by shri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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