TaxTMI 
TaxTMI 
1993 (3) TMI 174
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....st Colony, Jaipur. Shri V.N. Ghiya had gone abroad in April, 1988 and he had informally and not with any formal arrangement, asked the assessee to look after his business in his absence. Shri V.N. Ghiya came back in the morning of 21st July, 1988, and in the same morning a search was conducted by the IT Department at the business/residential premises of both, viz., the assessee as well as Shri V.N. Ghiya. He pointed out that as per the order under s. 132(5) of the IT Act, dt. 17th Nov., 1988, only Rs. 20,000 were considered to be assessee's undisclosed income. Thereafter on 12th Oct., 1990 a letter of enquiry was issued to the assessee alongwith notices under s. 148 for asst. yrs. 1983-84 to 1989-90. Referring to its copy on pp. 10-12 of his paper book, he pointed out that this letter enquired nothing about the assessment year under consideration, i.e., asst. yr. 1989-90. Specifically pointing out to the querry about Annx. A-10 sub-paras (i) to (iv) on page 11 of the paper book, he claimed that this would show that whereas the Assessing Officer required assessee's explanation regarding various papers in this Annexure 10, viz., pp. 3 to 7, 20 to 27 and 32, 33, etc., no question was ....
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....td. and him. He also explained in detail the circumstances in which he was showing this amount as his income. Shri Vaish submitted that inspite of this the Department had imposed the impugned penalty on the assessee under s. 271(1)(c) of the IT Act. 3. Shri Vaish argued that nowhere the Department had worked out or established that it was assessee's income, but simply because the assessee had shown it as his income, it had been assessed in his hands on 27th March, 1991 itself. Shri Vaish recalled that in the assessment order those papers have not been correlated with the assessee; in the letter of Assessing Officer dt. 12th Oct., 1990 there is nothing relevant to asst. yr. 1989-90; assessee's letter dt. 26th Nov., 1990 surrendering some income, has also nothing to do with the assessment year but earlier years. He repeated that even after surrender of Rs. 35,000 in this year, assessee's income was not taxable. He argued that the assessee had never owned those papers but had insisted that they were with him only in "Trustee capacity" and the assessee repeatedly said that it was not his income. Further, Shri Vaish urged, that only papers were found and no money was found. He furthe....
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....D 161 (Del)(SB) in the head notes it was mentioned that though prima facie an ITO can tax a receipt as taxable which is disclosed as taxable, yet that could not work as an estoppel and that admission depends on circumstances. Similarly, in the case of Sir Shadilal Sugar & General Mills Ltd. vs. CIT (1987) 64 CTR (SC) 199 : (1987) 168 ITR 705 (SC) it was observed that from an assessee agreeing to an addition it did not follow that it was his concealed income and that there could be hundred and one reasons for assessee agreeing to the addition, but that could not absolve the Revenue from its obligation to prove that it was assessee's concealed income before penalty for concealment could be levied. According to Shri Vaish, this principle has been reiterated in the decisions in the cases of Director of Inspection vs. Pooranmal & Sons & Anr. 1974 CTR (SC) 243 : (1974) 96 ITR 390 (SC); C.P.A. Yoosuf vs. ITO (1970) 77 ITR 237 (Ker) confirmed in (1973) 90 ITR 501 (Ker) at CIT vs. Anwar Ali (1970) 76 ITR 696 (SC) and Wings Wear (P) Ltd. vs. ITO (1990) 33 ITD 41 (Del)(TM) at p. 50. He referred to the decision in the case of Prakash Trading Co. vs. ITO (1990) 33 ITD 131 (Del) where it was aga....
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....that it had made its own investment in the stocks which were pledged/hypothecated with the bank, the penalty under s. 271(1)(c) was deleted. It was held that since the explanation of the assessee was bona fide and reasonable penalty could not be sustained under the Explanation also. The learned counsel also referred us to the decision of this Bench in the case of Mahendra Transport Co. vs. Assessing Officer (1992) 43 TTJ (Jp) 13 in which this Bench had concluded that mere fact that addition had been agreed to, could not by itself justify the imposition of penalty for concealment. He also referred to the decision in the case of Doon Valley Roller Flour Mills (P) Ltd. vs. IAC (1989) 31 ITD 238 (Del) in which case also during search some papers were found at the place of shareholder of the Company and the company had agreed to an addition against which no appeal was filed. It was held that agreement for addition was not sufficient for imposition of penalty. 6. In this background the learned counsel submitted that the basic principle which emerged was that for imposition of penalty, the Assessing Officer had to prove, and for that purpose put in fresh efforts, to the effect that the....
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....assessee and the transactions therein pertained to the assessee. He submitted that the IT Act does not recognise any conditional return; in fact the return of income is verified as the true income of the assessee. The learned Departmental Representative also referred to the order sheet entry dt. 27th March, 1991 which has been reproduced in the penalty order and pointed out that the assessee had surrendered the amount inspite of warning from the Assessing Officer that no relaxation would be shown in matters of imposition of penalty or charging of interest. According to him, the surrender was the result of 2-3 events which were clear without deep examination and those events were search by the Department, investigation by the Assessing Officer and enquiries made from the assessee. 9. Regarding the argument of the learned counsel for the assessee in respect of application of Expln. to s. 271(1)(c), he referred to the decision in the case of Badri Prasad Om Prakash vs. CIT (1986) 54 CTR (Raj) 399 : (1987) 163 ITR 440 (Raj) where at page 446 the Hon'ble Court had held that Expln. to s. 271(1)(c) was not separate and was only part of that section. He submitted that in the instant cas....
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....tical basis i.e. on 80% and 20% difference basis the imposition of penalty. But now there are five Explanations and each deals with a different situation and hence it had to be told to the assessee as to under which Explanation his case was covered. Regarding the argument of the Departmental Representative that his surrender was relevant for determining the quantum of penalty, Shri Vaish submitted that this matter was neither raised nor discussed nor even mentioned in assessee's reply nor in the penalty order and hence it could not be said that the purpose of surrender was merely to get imposed lower penalty. He reiterated that even an opportunity to explain those entries had not been given to the assessee during either the assessment proceedings or penalty proceedings. 12. We have carefully considered the facts and circumstances of the case and the detailed arguments and the case law advanced from both the sides. Since we have already mentioned in great detail the facts as well as the arguments from both the sides, it may not be necessary for us to repeat them. However, a reading (sic) of the preceding part of this order leads us to the conclusion that the arguments advanced by....