9911796707
TMI Blog1983 (2) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... August, 1974 declaring total income of Rs. 46,670. The assessment was completed on 31st December, 1976 on a total income of Rs. 77,500. This included, inter alia an addition of Rs. 77,280 as the "cost of excess cotton seeds pledged with bank as discussed above as unexplained investment". The assessment was challenged in appeal and the AAC held that "there does not appear to be any reason for interference" in so far as this issue is concerned. The assessee came up in appeal before the Tribunal and the Tribunal also confirmed the addition. 3. The Income-tax Officer issued a notice to show cause why penalty need not be levied under section 271 (1) (c). After convening the assessee and considering the submissions made in the written explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted, however, that this has not been proved because the assessee was only having hypothecation of the goods and there is no allegation of fabrication of accounts, there is no extra stock purchased outside the books of account and as such a case of concealment is not there at all. 6. Anticipating that relying upon the judgment of the Punjab Haryana High Court in the case of Vishwakarma Industries v. CIT (1982) 135 ITR 652 (FB), the revenue may ask for invocation of the explanation to section 271(1) (c), he submitted that there is no warrant for applying the Explanation because the Income-tax Officer has to give a clear cut finding in the order and show the computation so as to bring the case within the ambit of the Explanation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the explanation to that section and as such the penalty levied by the Income-tax Officer and sustained by the AAC is without any justification. He further relied on the following judgments: (i) Jindal Cotton General Mills v. Income-tax Officer (1982) 12 TLR 225 (Chd. Trib.); (ii) CIT v. P.A. Patel (1981) 127 ITR 390 (Pat); (iii) Bhagat Ram Dhiman v. Income-tax Officer (1981) 13 TLR 592 (Chg. Trib.) (iv) CIT v. V.L. Balakrishnan (1981) 130 ITR 138 (Mad.); (v) CIT v. Dewan Singh Gurbachan Singh (1982) 31 CTR (P H) 90. 7. On the other hand, the revenue contended that it is not a case of hypothecation but of pledging and in considering the issue before us we have to take the totality of the circumstances into considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... othecation, which is the case before us, the stocks were not physically in possession of the bank and the additions were made merely by rejecting the explanation of the assessee. In so far as the addition to the total income for the purpose of assessment is concerned, that course may be justified but in the case of penalty proceedings which are entirely independent proceedings in view of the judgment of the Supreme Court in the case of Brij Mohan v. CIT [1979] 120 ITR 1 (SC), the evidence has to be considered independently of the assessment proceedings. When we consider the evidence before us, we do not find justification for the charge of concealment levied upon the assessee. The question of penalising the assessee for concealment of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neglect on his part lies upon him, i.e., the assessee. The counsel, therefore, urges that there was no justification for cancelling the penalty. The contention is, however, not tenable. It is obvious that resort to the Explanation noticed above can be had only in the case where there is a finding that the total income returned by the assessee is less than 80 per cent of the total income assessed. No such specific finding is available in the present case." We find that the Hon'ble court has laid down guidelines as to in which cases, when penalty had been levied under the substantive section, the Explanation can be invoked. Such a case would be where there is a finding by the Income-tax Officer that resort to Explanation under section 271( ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
