TaxTMI 
TaxTMI 
2005 (8) TMI 307
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....t a benami S.B. A/c was operated by the Managing Partner (appellant in these appeals). In the name of Mr. M.S. Abdul Khader, Savings Bank a/c in Laxmi Vilas Bank, Adoni was maintained bearing a/c No. 1631. When this was put to the assessee, he agreed that the entries in bank a/c reflect his transactions. Letter dated 30-7-1992 addressed by assessee to ITO, reads as under: "Kindly permit me to file this submission before I answer your questions in pursuance of a summon issued upon me to appear before you on 31-7-1992. I beg to submit as under. I own the responsibility of maintaining an Savings Account in the name of M.S. Abdul Khader in Laxmi Vilas Bank, Adoni (S.B. Account). Immediately on obtaining the bank extracts in a day or two I will file my revised return of income with the peak credit of deposits in that account, along with the self-assessed tax." 4. The assessments were therefore reopened by issuing a notice dated 31-7-1992 under section 148 of the Act. In response to the notice the assessee declared peak unexplained credit of Rs. 37,500 for the assessment year 1990-91 and Rs. 9,086 for the assessment year 1991-92. After adjusting the earlier ....
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....f the firm have been examined on oath. Except one, all the others have no knowledge of the Bank account in the name of M.S. Abdul Khader nor its operation. On the other hand even before I gave testimony filed a letter before you owning the responsibility of the Bank account. I submit there is no shame in making a mistake but there is a greater wisdom in recognizing it great humility in admitting it but above all, great glory in correcting the same, I have exactly done this. I filed Revised Returns for both the years admitting peak credits. I paid the taxes on this spot. The Bank entries consists of deposits and withdrawals. On 8-12-1989, I deposited Rs. 20,000 while opening the account. The very next day, I withdrew Rs. 10,000 and the other next day I withdrew Rs. 1,000. This would not have been possible but for the earlier credit. Similar is the case with all other entries for two years. As seen from the Bank account, each deposit is linked to withdrawal and there is nexus between both. Considering only the credits would have been justified as proposed in your notice, if there were no debit entries. Both being there, they canno....
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....ality of mercy is not strained, it could still drop gently from your pen." 6. It may be relevant to notice that the Assessing Officer was of the opinion that the income offered to tax by the assessee is not assessable in his hands since it is the income of the firm. In other words, though the investigation made by the Assessing Officer and other material available on record indicates that the income referable to peak credits is assessable in the assessee's hands, the assessing officer was not clear about it and hence he made protective assessments in the assessee's hands. Assessing Officer was of the opinion that peak credit is taxable in the hands of the firm. 7. In the penalty proceedings, the Assessing Officer observed that the assessee was cornered and hence he filed revised returns, which cannot save him from levy of penalty. Appeals filed before CIT (Appeals) were also dismissed on the ground that the revised returns were filed consequent to the notice under section 148 as a result of detailed investigation undertaken by the department and, hence they cannot be treated as voluntary returns. The assessee had full knowledge of the transactions in the bank account ....
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.... not bona fide. If the statement of the assessee is false, the converse must be true. If the converse is true, it implies that the assessee's statement that the transactions in the Bank account are his own funds is wrong in which event no addition could have been made by the assessing officer and consequently penalty is not imposable. In fact, it would be in conformity with the view of the assessing officer inasmuch as he did not accept, at the first instance, that income was earned by assessee but held that it was the income of the firm. If statement of the assessee is not false, it is bona fide statement. However, nothing much turns upon this statement. In fact, it is not the case of the assessee that he has furnished true and correct particulars of income. He admitted the mistake and filed revised returns in response to notice under section 148 of the Act. Thus the only question remains to be considered is whether penalty is automatic even if assessee corrects his mistake. This is a case where it cannot be said that the revised returns were filed after detection by the Department. The very fact that the income returned in response to notice under section 148 was assessed on ....