TaxTMI 
TaxTMI 
1991 (6) TMI 113
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....ee as its "income from undisclosed sources". The assessments order gave the details of those entries. The ITO also recorded the statement of the partner Shri Atam Singh on 18th March, 1980 and of the partner Shri Mahendra Singh on 31st March, 1981 and he also furnished an opportunity to the assessee for filing confirmation or production of Shri Sirohya vide order sheet entry dt. 28th March, 1981 for which the assessee expressed his inability as Shri Sirohya was out of Udaipur. The assessments was completed by the ITO on 31st March, 1981 accordingly. 3. In appeal, the assessee challenged the addition of Rs. 23,000 before the learned AAC (for short AAC). However, at the time of the hearing of that appeal, the ground was not pressed and the amount was surrendered and, therefore, AAC vide his order dt. 14th Aug., 1981 confirmed that addition. 4. The assessee again took up the matter in further appeal to the Appellate Tribunal and the ground relating to this addition was not pressed on ground that the trading addition had been deleted. In this connection para 3 of the order dt. 8th Nov., 1982 of the Appellate Tribunal in ITA No. 1133/Jp/1981 refers. 5. With reference to the addition ....
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..... Lastly it was said that the assessee nowhere admitted that it had concealed the income. However, the ITO noticed that the confirmation and affidavit filed by Shri Sirohya were an afterthought. He took the view that the assessee's Act of surrendering cash credit before the AAC and the Appellate Tribunal clearly established that the assessee had acted deliberately in defiance law or acted in conscious disregard of its obligations in furnishing true particulars of its income. He, therefore, levied a penalty of Rs. 15,000. 6. The assessee went up in appeal before the learned AAC who vide his order dt. 8th March, 1984 cancelled the penalty. The cancellation of penalty was based on the following observations: (i) That after the explanation dt. 16th Feb., 1983 filed by the assessee during the penalty proceedings, the ITO took no action till 26th March, 1983 when he wrote to the assessee to produce Shri Sirohya for verification and to also produce any other information. (ii) that in the reply dt. 26th March, 1983, the assessee had explained that Sirohya was at Bombay and it was not possible to compel him to come for verification in such a short time. Thus the opportunity given by the ....
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....were credited in this account which were nearly Rs.75,000 and he had withdrawn the money gradually from the account and even on 14th Dec., 1977 there was in account a credit balance of Rs.5,960. (iii) That Shri Sirohya clearly state before the ITO that before starting the contract work, he had done some work at Bombay and that for a number of years he was getting a salary of Rs. 700 to Rs. 800 per month which was entirely saved since the expenditure on food, clothes and stay were fully made by the employer and that his wife was also earning. (iv) That Shri Sirohya had certainly a good deal of money with him in March, 1977 as his past savings and out of this only Rs. 20,000 were deposited with the bank account and the balance was kept at home. (v) That Shri Sirohya was in a position to advance Rs. 5,000 to the assessee on 10th March, 1977 even if he made the first withdrawal from his bank account on 15th March, 1977 (received back on 18th March, 1977). That after excluding Rs. 25,000 available with the assessee on 18th March, 1977 Shri Sirohya had advanced Rs.18,000 which could come out of the substantial withdrawals made by him from time to time his bank account between 5th Marc....
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....000 which represented the peak credit had to be taken as the unexplained cash credit. Before the learned AAC in appeal all that finds mention from the order of the AAC is that the assessee did not press the ground. Even before the Tribunal the ground was not pressed for the reason that the trading additions had been deleted. These materials do not support the proposition that at any point of time the assessee had admitted that the addition of Rs.23,000 represented its concealed income. Thirdly we find that during the assessment proceedings, the assessee does not appear to have been asked to produce any confirmation letter, affidavit or the creditor. The assessment orders was completed on 31st March, 1981 after examining the statements of the partners Atam Singh and Mahendra Singh on 18th March, 1981 and 31st March, 1981. A perusal of the penalty order shows that the ITO had asked the assessee to file confirmation or to produce Shri Sirohya on 28th March, 1981. It has not been controverted that 29th March, 1981 and 30th March, 1981 were holidays of HOLI. Therefore, the affording of an opportunity for the production of an evidence was not real but illusory. Therefore, all that could ....