TaxTMI 
TaxTMI 
1991 (7) TMI 149
X X X X Extracts X X X X
X X X X Extracts X X X X
....yed K. Rafi and Smt. Habeeb Bi. These are close relations of the assessee and it was explained to the ITO that the assessee had taken a loan of Rs.14,000 from these persons which was utilised for the construction of the maternity home. The loan from the children now taken was only for the purpose of repayment to these persons. The ITO did not accept the contention of the assessee and made an addition of Rs. 14,000 as income from other sources. The assessee was also not successful before the first appellate authority. 3. Before us, the learned counsel for the appellant, Shri M.J. Swamy argued that the assessee had genuinely taken loan from Sri Syed K. Rafi and Smt. Habeeb Bi which was utilised for the construction of the maternity home. These persons were going abroad and demanded that their money should be returned. Since the assessee did not have any funds at that time, she had to borrow the sum of Rs.14,000 from her minor children. It is also pointed our by the learned counsel that the ITO has not cast any doubt on the fact of borrowal from the minor children. He also urges that if the ITO was not satisfied, he should have summoned the persons viz. Syed K. Rafi and Habeeb Bi. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eted the assessment on a total income of computation of income on 21st March, 1986 showing a loss of Rs. 2,713, and also filed a revised return on 27th March, 1986 declaring an income of Rs. 1,29,910. He added Rs.55,813 as interest and Rs. 14,000 and Rs. 13,109 as income from other sources. These additions were considered as concealment of income and a penalty of Rs.44,368 was levied. 7. On appeal to the CIT(A), the assessee did not succeed, and as a matter of fact, the CIT(A) pointed out some arithmetical error due to which the penalty was increased from Rs.44,368 to Rs. 57,146. The CIT(A) directed the ITO to levy a minimum penalty of the said sum of Rs. 57,146. Against this order of the CIT(A), these assessee has come in appeal before us. 8. The learned counsel, Sri Swamy, strongly argued that the CIT(A) was in error on facts and in law in confirming the penalty under s. 271(1)(c). On the facts and in the circumstances of the case, the assessee cannot be held guilty of concealment or filing of inaccurate particulars. The learned counsel points out that as far as disallowance of interest of Rs.55,813 is concerned, this has been disallowed by the ITO on the ground that this i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....imed is concerned. The disallowance of expenditure does not amount to concealment. In this regard, the learned counsel relies on the decisions reported in J.K. Jajoo vs. CIT (1990) 83 CTR (MP) 41 : (1989) 47 Taxman 11 (MP) and Addl. CIT vs. Delhi Cloth & General Mills Co. Ltd. (1984) 42 CTR (Del) 188 : (1986) 157 ITR 822 (Del). The learned counsel, therefore, urges that the penalty order of the Revenue should be vacated. 12. On the other hand, the learned departmental representative, Sri Shyam Sunder, strongly urges that the assessee was guilty of concealment of income. he points out that the behaviour of the assessee in filing revised return would go to show that the assessee had deliberately concealed particulars of income and had filed the loss return. When the ITO had detected the concealment, the assessee immediately filed the revised return reducing the loss. He further points out that the claim of interest of the assessee at Rs. 1,10,723 was a fraudulent claim. The assessee should have realised that only a sum of Rs. 45, 910 could be allowed as the legitimate interest of the year and, therefore, the excess claim to the extent of Rs. 55,813 was made by the assessee with a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erest. We are, therefore, of the view that this cannot be construed as concealment of income. 14. Regarding the addition of Rs. 14,000 though we have confirmed the addition in quantum appeal, it cannot be said that the Revenue has discharged the burden of proving that the sum of Rs.14,000 represented concealed income of the assessee. The addition may have been made and even sustained by hte appellate authorities on a different footing, but that does not automatically lead to the conclusion that the assessee is guilty of concealment. Finding in the assessment order may be material but is not enough for the purpose of penalty under s. 271(1)(c). The ITO has to conclusively prove that the assessee is guilty of concealment before the penalty under s. 271(1)(C) can be successfully levied. In the case before us, the ITO has made no attempt in his penalty order to prove that the assessee has concealed the particulars of income or has filed inaccurate particulars thereof. As a matter of fact, the penalty has been imposed in a mechanical manner on the basis of a finding given in the assessment order. The action of the ITO is contrary to the decisions of the jurisdictional High Court in t....