TaxTMI 
TaxTMI 
TaxTMI 
1990 (3) TMI 133
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....on a total income of Rs. 92,979, which includes a sum of Rs.21,000 assessed under the head other sources representing peak credits relevant for the year of account on account of pronotes kept outside the books of account. The surrender of Rs. 21,000 was due to the fact that the pronotes kept in a locker at Hyderabad came to surface on account of the search conducted by the Intelligence Wing and seizure of those pronotes by them. According to the Department but for the search and seizure, the assessee would not have admitted this amount of Rs. 21,000 under the head 'other sources'. While completing the assessment on 30th March, 1985 notice under s. 271(1)(c) was issued to the assessee for concealment. The assessee submitted a reply to the penalty notice. In the said reply it is stated that the previous year for any addition to be made in respect of advances outside the books of accounts in terms of ss. 69 and 69B should be only the financial year as per the provisions of law and since the assessee had voluntarily admitted the income in the revised return, there is no case for starting any penalty action. The surrender of Rs. 21,000 as part of the income in the revised return filed b....
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.... assessee's representative agreed and requested that the income admitted by it in the return for the asst. yr. 1980-81, 1981-82 and 1982-83 under the head 'other sources' need not be disturbed and in these circumstances the peak credit statement had not been reworked on financial year basis. In the quantum proceedings the assessee did not object to the above procedure and did not go in appeal on the fresh assessments made till today. The ITO felt that this is a fit case for imposition of penalty under s. 271(1)(c) for concealment for the four reasons which were recorded in the penalty proceedings. (1) In the raid conducted some unaccounted pronotes were unearthed. When they were put to the assessee they were not denied that the pronotes did not belong to them. They merely pointed out that the peak credits worked out by the Department was wrong and funds were available out of the pronotes matured and they were ploughed back. They demanded credit for such reploughed funds. Ultimately the Department acted on their own peak statement filed. (2) When the assessee tried to conceal a portion of their business activities outside their books of accounts, it amounts to clear attempt to evade....
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....income of the assessee from 'other 'sources'. The Act of positive concealment on the part of the assessee was not established, which is very essential in order to sustain penalty under s. 271(1)(c). Before the AAC it was sought to be argued that rejection of explanation offered by the assessee should not form the basis for imposition of penalty. It was also argued that a portion of the amount added as income from 'other sources' related to non-taxable period, which cannot be brought to tax. However, in order to purchase peace only the assessee agreed for the addition. It was also submitted that due to passage of great length of time, there is no opportunity for the assessee to prove the correctness of the transactions under the seized pronotes and in fact this position only compelled the assessee to offer the amount for assessment. This offering of the said amount of Rs. 21,000 would show that the assessee had no desire to hide any income which is properly taxable. Ultimately the AAC confirmed the penalty levied by the ITO. It would appear that the AAC confirmed the view of the ITO that even if the concealment is found in the original return and if incorrect income is found to have....
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.... not fully explained at this late stage. Anyway for purchasing peace, we have worked out the peak of these credits (pronotes) for the asst. yr. 1980-81 and this comes to Rs. 21,000. A statement for the peak arrived at as above had already been submitted to you. In these circumstances, we have been compelled to file a revised IT return in the firm's case for the asst. yr. 1980-81. We now file the revised IT return in the firm's case for the asst. yr. 1980-81. We now file the revised IT return for your kind consideration wherein we have admitted a sum of Rs. 21,000 being the total amount of peak credit besides the income already admitted". The above covering letter and the contents therein would clearly show that the assessee revised its return on fully verifying its account books with the Department and the transaction covered by the seized pronotes were not found to have been entered into the account books, perhaps made the assessee to admit a further income of Rs. 21,000 for the asst. yr. 1980-81. If the seized pronotes were already noted in the account books of the assessee then there would not have been any need for it to admit either Rs. 21,000 or any part of it as its further ....
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....s of Ayyaswami Nadar & Bros. vs. CIT (1956) 30 ITR 565 (Mad) and Sivagaminatha Moopanar & Sons vs. CIT (1964) 52 ITR 591 (Mad), wherein it was held that if the assessee, at the time of submitting the original return intended to conceal a part of his income or deliberately gave false particulars at that time, the mere fact that he subsequently rectified the omission by giving the full particulars would not avoid the applicability of s. 28(1)(c)of the IT Act. The Madras High Court held as follows at page 613: "We may point out with respect that there would appear to be a mixing up of two things--(1) the Act of filing of the subsequent return giving full particulars of the income, while in the original return the assessee had deliberately furnished inaccurate particulars of income, and (2) the stage and the time at which the subsequent return was filed, namely, whether it was done voluntarily or at the time when the Department had probed into the matter and was at the point of discovering the concealment made by the assessee. As we have pointed out already, the second aspect will have no relevancy whatever to a case where there was concealment in the original return, because the conce....
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....ome was revised upwards. Simply because there is an upward revision in the revised return it should not be visited with any penalty. Firstly in order to show the nature of the seized material the assessee did not file a copy of the seizure list, which must have been provided to the assessee, either before me or before the lower authorities. Unless such seizure list is filed and unless it is very evident from that list that only blank pronotes were seized without disclosing the name of the assessee therein, the present argument of the assessee cannot be countenanced. Further if the argument of the learned counsel for the assessee is that the blank pronotes do/not belong to the assessee and they do not reveal any concealed income there is no reason why such blank pronotes should be kept in bank locker belonging to the assessee. Further in view of the contents of the covering letter dt. 19th Feb., 1983 from which extracts were already taken and provided in the prior paras, would clearly show that this argument was not available to the assessee. In the said letter it is stated that the peak of these credits evidenced by the seized pronotes was worked out and it came to Rs. 21,000. If t....
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.....R. Arulprakasam vs. ITO (1987) 61 CTR (Mad) 54 : (1987) 163 ITR 487 (Mad), held that where an assessee filed a revised return after the concealment had been detected by the ITO, the contumacious conduct on the part of the assessee in filing the original return, which, if it had been accepted, would have resulted in avoidance of tax, would not be wiped out. In the proceedings for imposition of penalty the original return alone should not be considered in isolation without reference to the subsequent conduct of the assessee and all the facts and circumstances commencing with the original return and ending with the assessment have to be taken as relevant for considering the assessee's liability for penalty. Again the Madras High Court in Rathnam & Co. IAC, Madras (1980) 124 ITR 376, held that the applicability of s. 271(1)(c) did not depend upon the consent or otherwise of the assessee. In the said case it was held that the inference drawn by the ITO and the Commissioner that the petitioner should be taken to have deliberately concealed the particulars of its income by his conduct in agreeing to the addition being made to his income was justified. The facts of the Kerala High Court i....
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....t. Before the Allahabad High Court in (1977) 108 ITR 96(All) it was sought to be contended that if the assessee makes a voluntary disclosure of concealed income he has been absolved from penalty. This argument was repelled by the Allahabad High Court stating that such an argument is not available to the assessee. The Allahabad High Court, however, stated that this of course should be taken to be a circumstance which can be taken into consideration by the IT authorities in determining the quantum of penalty. In that case only the minimum penalty was levied and therefore no further relief was granted to the assessee. In the case before men also Rs.13,860 is the minimum penalty leviable as pointed out by the ITO in the penalty proceedings and the minimum only was imposed. The decision of the Punjab and Haryana High Court in Mahavir Metal Works vs. CIT, Punjab (1973) 92 ITR 513 had dealt with the question of burden of proof in penalty proceedings. The High Court held the law regarding burden of proof as follows: "Penalty proceedings being of a penal nature it is for the IT Department to establish that the assessee was guilty of concealment of particulars of his income. But in a case wh....