1986 (9) TMI 128

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....Rs. 1,37,840 in the following manner. Firstly he had accepted the valuation of the departmental valuation cell at Rs. 7,03,000. He had deleted the book value of Rs. 4,94,495 and from the resultant figure of Rs. 2,08,505 he had accepted the returned loss at Rs. 72,140 and determined the unexplained investment of the assessee at Rs. 1,37,840. Regarding the following six items of building material the cost adopted by the departmental valuer and the excess worked out was as follows: Name of the item Shown by the appellant Adopted by the valuer Excess   Rs. Rs. Rs. 1. Stell for RCC, etc. 1,26,800 1,45,388 12,688 2. Wood, plaster of paris and glass materials 1,27,150 1,57,658 30,508 3. Bricks 42,000 71,142 29,142 4. A.C. Sheets 3,000 12,000 9,000 5. Misc, items lime CC pump etc. 26,000 46,600 20,600 6. Electrification 67,134 92,850 25,716 Total 3,92,084 5,25,638 1,33,55 3. In the appeal before the ld. CIT(A) the cost of construction with regard to a sum of Rs. 1,70,000 was disputed. The CIT(A) inferentially held that the assessee had no objection for taking cost of the cons....

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....ealed income by furnishing inaccurate particulars of the cost of construction of the theatre and render itself liable for penalty under s. 271(1)(c)(iii) and Expln. 1 thereunder for the failure to disclose correct expenditure for the construction of the theatre which has been considered as income under s. 69B. By the time the ITO passed the penalty orders dt. 24th Sept., 1984 the CIT(A) only disposed of the quantum appeal filed before him and thus taking the order of the ld. CIT(A) in the quantum appeal into consideration the ITO levied penalty of Rs. 81,580 under s. 271(1)(c)(iii) and Explanation thereunder. The penalty order was passed after purporting to have got the approval of the IAC, Nellore. Aggrieved against the penalty orders dt. 24th Sept., 1984 the assessee went in appeal before the CIT(A), Visakhapatnam who by his impugned orders dt. 14th May, 1985 ultimately dismissed the appeal. Further aggrieved by the impugned orders of the CIT(A) the present second appeal is filed by the assessee and thus the matters stands for our consideration. 6. It is contended by Shri M.J. Swamy, ld. counsel for the assessee that the addition was made purely on estimate basis. When an asse....

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.... any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished exceeds the total income assessed, means the tax that would have been chargeon the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income. In order to explain the meaning of the Explanation in its correct perspective the ld. counsel had given four illustrations: Illustration No. 1 Business loss (-) 50,000 . Concealed income (+) 1,00,000 . Assessable income . 1,50,000 Illustration No. 2 Business loss (-) 50,000 . Concealed income (+) 51,000 . Assessable income (+) 1,000 Illustration No. 3 Business loss (-) 50,000 . Concealed income (+) 40,000 . Assessable income . 10,000 in the case of the appellant Illustration Business loss (-) 50,000 70,000 No. 4 Concealed income (+) 20,000 30,000 . Assessable loss . 30,000 40,000 In the above illustrations he stated that in the first two instances Expln 4(a) applies f....

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....as every justification for the addition of Rs. 38,505. He argued that the Tribunal categorically found that the addition of Rs. 60,000 confirms by them should be treated as an addition made under s. 69B. In such a case no burden lay on the Department to prove conscious concealment on the part of the assessee. On the other hand, it is for the assessee to prove his bona fides in not entering the sustained addition in its accounts books. The ld. Departmental representative also relied upon the decision of the Calcutta High Court in Sri Loknath Chowdhary vs. CIT (1986) 50 CTR (Cal) 340 : (1985) 155 ITR 291 (Cal). The Calcutta High Court speaking on the question of onus on addition made under s. 69 of the IT Act held as follows as per the head-note: "When an addition is made to the income of the assessee as unexplained investment under the provisions of s. 69 of the IT Act, 1961, such addition is deemed to be the income of the assessee for purposes of levy of penalty. But when the addition is made under s. 68 of the Act, it will not be deemed to be the income at the assessee for the levy of penalty. If unexplained investment is deemed to be the income of the assessee under s. 69, the....

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.... certain words especially the words exceeds the total income assessed, would become redundant or will have to be ignored. A construction which renders some of the provisions of statute redundant should always be avoided and that construction which gives full meaning to every word used in the provision of law would have to be preferred. If the construction sought to be put by Shri M.J. Swamy ld. Counsel for the assessee is adopted, as the correct one than every word used in Expln. 4(a) would have a meaning and none of the words of the said provision would become either redundant or surplus. While interpreting statutes it is common knowledge that Courts should avoid ascribing redundancy to legislature. Even on fair reading it is very clear to our minds that Expln. 4(a) comes into operation only when the concealed income exceeds the total income assessed. In case where concealed income does not exceed the total income assessed, it would not come into operation. In the last two illustrations already extracted above given by the ld. Counsel for the assessee the concealed income is less than the total income assessed especially when we take the loss as a negative income in view of the ra....