TaxTMI 
TaxTMI 
TaxTMI 
1993 (4) TMI 113
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....xtent of Rs. 47,100 in the personal accounts of the partners. The particulars of the cash credits found in the personal accounts of each of the partners are given by the Income-tax Officer in his penalty order dated 21-3-1985 and, therefore, they need not be repeated here. As usual in the earlier years, the assessee's A.R. who appeared before the Income-tax Officer with accounts etc. surrendered the above total credits as income of the assessee since even after adjustment of Rs. 41,000. It results in a small tax effect of Rs. 328. Penalty proceedings under section 271(1)(c) were initiated during the course of assessment proceedings. On behalf of the assessee, a reply was sent on 20-3-1985. It was contended that the credits noted in the personal accounts of each of the partners represent their agricultural income. However, the same was agreed to be added as income of the assessee-firm as the firm could not readily explain the credits. In fact the amounts of credit should not have been taken and computed in the total income of the assessee-firm. However, by virtue of his letter dated 27-12-1982, the total of the credits were added to the firm's income. The Income-tax Officer, B-Ward,....
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....he Department and the said onus was never discharged. In view of the large agricultural holdings of the partners, it would not be difficult for the assessee-firm to prove that the cash credits of Rs. 47,100 shown in the personal accounts of each of its partners really represented agricultural incomes of the respective partners. The Income-tax Officer did not bring any evidence on record disproving this basic contention of the assessee that the credits represented agricultural incomes of the partners. Hence there was no justification at all in levying penalty by invoking the provisions of section 271(1)(c). The contention of the assessee is found to have the support of the following decisions: (1) CIT v. Punjab Tyres [1986] 162 ITR 517 (MP) (2) Addl. CIT v. Burugupalli China Krishnamurthy [1980] 121 ITR 326 (AP) (3) CIT v. M. George & Bros. [1986] 160 ITR 511 (Ker.) (4) Gumani Ram Siri Ram v. CIT [1972] 85 ITR 67 (Punj. & Har.) (5) Sir Shadilal Sugar & General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) (6) Girdharilal Soni v. CIT [1989] 179 ITR 111 (Cal.). Therefore, the learned Commissioner (Appeals) had allowed the appeal filed by the assessee and cancelled the penalty impos....
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....llate orders. The penalty relates to assessment year 1982-83. The income-tax return disclosing loss of Rs. 31,143 was filed on 25-10-1982. The assessee was a firm of five partners. In the capital accounts of these five partners some credits were found totalling to Rs. 47,100 and when the Income-tax Officer had asked for the source of the credits, the assessee-firm did not have any explanation whatsoever and surrendered the same as income of the assessee-firm. In the assessment order dated 27-12-1982, the following is what is stated by the Income-tax Officer justifying the addition of Rs. 47,100 to the returned loss of Rs. 31,143: "The assessee's A.R. says that there is no explanation to offer regarding the source of the credits. In the circumstances all these credits are treated as income of the firm for which the assessee's A. R. has no objection. Total income is computed as under: Loss admitted Rs. 31,140 Less: Credits in partner's ....
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....rs in whose case definite sums of money was found as credit. It is contended that there was no firm finding that the sum of Rs. 47,100 constituted concealed income of the assessee for assessment year 1982-83. In the absence of such a firm finding from the Income-tax Officer, even in the assessment proceedings, if cannot be considered to be concealed income of the firm. Further if any sustainable addition is to be made it should be only in the individual assessments of the partners. Against the addition of Rs. 47,100 no appeal was preferred by the firm because it had sustained substantial losses and the loss that was returned in that year was Rs. 31,143 and even after the addition of Rs. 47,100, the tax payable would come to a negligible sum of Rs. 328 and not because the explanation offered was not true and cannot be substantiated. Since this is a penalty arising for 1982-83, the law applicable thereto is section 271(1)(c) read with Explanations 1 to 6 introduced with effect from 1-4-1976. The present set of Explanations 1 to 6 had replaced a single Explanation which used to be existing in the statute book from 1-4-1964 to 31-3-1976. The old Explanation was stated to be containing ....
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....3) CIT v. M.N. Chatterjee [1988] 170 ITR 87 (Pat.). Therefore, it can be seen that the main section 271(1)(c) itself deals with two specific offences, i.e., to say, concealing particulars of income or furnishing inaccurate particulars income. In CIT v. C.K. Naha & Bros. [1979] 117 ITR 19 (Cal.) and Padma Ram Bharali v. CIT [1977] 110 ITR 54 (Gauhati) and also in CIT v. Patna Timber Works [1977] 106 ITR 452 (Pat.), it was held that initiating a penalty proceeding for one offence and finding the assessee guilty of another offence or finding him guilty of either one or the other cannot be sustained in law, unless inaccurate particulars are furnished to strengthen his concealment of income by a particular assessee. In C.K. Naha & Bros.' case, the Income-tax Officer initiated penalty proceedings treating the sum of Rs. 10,263 as amount of concealed income and referred the case to the Inspecting Asstt. Commissioner. However, while giving permission to the penalty proceedings, the Inspecting Asstt. Commissioner imposed a penalty on a different sum of Rs. 19,647 by making out a new case of concealment of that sum. It was found by the Tribunal that the sum of Rs. 10,263 was not included in....
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....t page 63 of the reported decision:--- "It also has to be remembered that clause (c) of sub-section (1) of section 271 deals with two specific offences, that is to say, concealing particulars of income or furnishing inaccurate particulars of income. No doubt, the facts of some cases may attract both the offences and in some cases there may be overlapping of the two offences, but in such cases the initiation of the penalty proceedings also must be for both the offences. But drawing up a penalty proceeding for one offence and finding guilty for another offence or finding guilty for either the one or the other offence, as has been done by the Tribunal in the instant case, cannot be sustained in law. This view is supported by the decision of the Gujarat High Court in CIT v. Lakhdhir Lalji [1972] 85 ITR 77 (Guj.)" Ultimately, their Lordship had cancelled the penalty and set aside the Tribunal's order. This Tribunal may straightway observe that in this case, penalty notice was never issued for the offence of deemed concealment against the assessee-firm under Explanation 1 to section 271(1)(c). The penalty notice itself was not filed before this Tribunal. However, the fact that penalty ....