TaxTMI 
TaxTMI 
1977 (8) TMI 75
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....ion etc., in the earlier years for which no accounts were maintained. It was stated that the assessee filed returns for the asst. yrs. 1958-59, 1959-60, 1960-61 and 1961-62 voluntarily declaring incomes of Rs. 25,000, Rs. 20,000, Rs. 20,000 and Rs. 16,000 respectively. The assessee explained that the investment of Rs. 60,900 made during the asst. yr. 1962-63 came from the aforesaid past incomes. The ITO considered the explanation of the assessee as unsatisfactory for the detailed reasons stated by him in his order for the asst. yr. 1961-62. He was of opinion that the assessee did not do any business in the past at all and so the sources for the investment of Rs. 60,900 remained unexplained. Hence, he assessed the sum of Rs. 60,900 as the assessee's income under the head 'other sources' and started penalty proceedings under s. 271(1)(c) of the Act. He referred the penalty proceedings to the IAC under s. 274(2) of the Act. 4. In the course of the penalty proceedings, the assessee explained that he actually earned income in the past years and the returns were filed and so the investments should have been regarded as satisfactorily explained. The IAC rejected this explanation, mainl....
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....s and made no independent enquiry. This fact, according to him, vitiated the penalty orders. Lastly, he stated that the explanation of the assessee in the course of the penalty proceedings did not arise out of any fraud or gross or wilful neglect on his part and that the explanation, even though not accepted in the quantum assessment, should have been considered quite probable in the penalty proceedings. He relied on the decisions in the cases of CIT vs. S.P. Bhatt (1974 ITR 440), and Addl. CIT vs. Sadiq Ali & Bros. (1973) 92 ITR 276, in support of his contention. He also filed copies of certain orders of the Tribunal in support of his contention. 7. Sri A.N. Mishra, the learned Representative for the Department, on the other hand, supported the penalty proceedings. He pointed to the conduct of the assessee in not returning the income alleged to have been earned by him at the proper time. The assessee failed to file the return before any enquiry was started which showed that the assessee intended to suppress the income. He relied on the order of the Tribunal passed in the quantum assessment wherein the unexplained investments had been confirmed as the assessee's income from 'oth....
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....as added the share income of Rs. 1,962 from Asiatic Trade Combine. The ITO observed that the assessee carried on no business and earned no income at all as there was no evidence to support this claim. However, as a protective measure, the disclosed income of Rs. 15,000 was assessed under the head business for the asst. yr. 1961-62. For the asst. yr. 1962-63, the assessee filed a return, on 24th Jan., 1971 showing an income of Rs. 9,548 as share income from the aforesaid firm. As stated earlier, the ITO completed the assessment after including the sum of Rs. 60,000 as income from 'undisclosed sources'. For the asst. yr. 1963-64, the assessee filed a return on 29th Jan., 1971 in response to notice under s. 148 of the Act. The ITO completed the assessment including the sum of Rs. 17,550 as the assessee's income from 'undisclosed sources.' In computing the unexplained investments, the ITO had give benefit of the sum of Rs. 28,000 assessed during the asst. yrs. 1958-59. The ITO did not given credit for the income of Rs. 40,000 returned for the asst. yrs. 1960-61 and 1961-62 on the ground that no assessment could be made thereon. He had also not given credit for the sum of Rs. 15,000 ass....
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....efore the ITO that the assessee claimed to have earned income from commission received on supplies and other contracts from 1957 to 1961. This period relates to the asst. yrs. 1958-59 to 1961-62. In the same explanation, the assessee had stated that he had already filed the return for the asst. yr. 1958-59. Thus, the assessee was referring to a definite source from which he received the income in the past. In fact, he filed returns, though belatedly, for all the four assessment years. The assessments were made on the returns filed for the first and the fourth assessment year and due credit for the same has already been given, even though no corroborative evidence showing that the assessee actually did business in the past years were produced. It, therefore, appears to us that the sum of Rs. 40,000 claimed by the assessee right from the beginning as the income that was earned by him in the intervening years cannot be brushed aside as totally improbable. When on the same evidence or lack of evidence, the assessee has been given credit for the income earned by him for 1959-60 and 1961-62, it cannot be said that the assessee could not have earned similar income in the two intervening y....
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....accurate particulars of his income. The two sections, namely, 271(1)(a) and 271(1)(c) of the Act, are different and penalties under them are imposable for different considerations. Nevertheless, we find that the assessee never gave any explanation at all with regard to the aforesaid two sums. If the assessee fails to give an explanation of the source of the investment, which is within his special knowledge and if there are no other facts on record pointing to the probable source of founds, the assessee, in our opinion, can not be said to have discharged the onus under the Explanation to s. 271(1)(c) of the Act. We do not think that this is a case of merely rejecting the assessee's explanation as unsatisfactory. This is a case where the assessee gave no explanation at all in respect of the amounts under consideration and so failed to discharge the onus that legally lay on him. We are in respectful agreement with the findings of the Tribunal in the quantum appeals that though the total investment of the assessee came to Rs. 1,04,850, he was harping on his savings from the income in the asst. yrs. 1958-59 to 1961-62 at Rs. 80,000 only. At no time did the assessee suggest the source fr....