TaxTMI 
TaxTMI 
2002 (11) TMI 792
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.... on April 27, 1983. During the course of this search and thereafter the Department carried out certain investigations. During the course of enquiry thus made, the following four cash creditors denied having made loans to the assessee which as per the assessee's books of account were as follows : Name of the party Assessment year Amount involved (Rs). S. D. Parikh 1980-81 25,000 M. M. Goel 1980-81 25,000 Harish Trading Corporation 1982-83 25,000 Chandrakant P. Shah 1982-83 50,000 By application dated June 29, 1983, the assessee filed a petition under section 273A before the learned Commissioner of Income-tax, Bombay City VIII, Bombay, declaring additional income of Rs. 35 lakhs and odd which included the surrender of claim of loans received in the names of various parties. Thereafter notices under section 148 were served upon the assessee for a large number of assessment years. The learned Commissioner of Income-tax, how ever, vide his order dated October 29, 1985, rejected the assessee's petition under section 273A on the ground that the disclosure made by the assessee was not voluntary. On completion of reassessments under section 14....
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....e has not been allowed capitalisation of this additional amount subjected to tax. The assessee has paid taxes on the additional income disclosed of more than Rs. 15 lakhs. A perusal of the reports of field/investigation officer shows that they were satisfied that the disclosure was voluntary and made before any enquiry in this direction of loans was conducted. The assessment orders were made only on the basis of the settlement petition, there is nothing in them to show that besides this petition certain other material vis-a-vis these loans was detected by the Revenue or found in the course of action under section 132. Except, in the case of the following four parties, viz., Rs. (1) Harish Trading Corporation Assessment year : 1982-83 25,000 (2) S. D. Parikh Assessment year : 1980-81 25,000 (3) M. M. Goel Assessment year : 1980-81 25,000 (4) Chandrakant P. Shah Assessment year : 1982-83 50,000 As per the report of the Income-tax Officer dated June 19, 1985, placed by the Departmental Representative on record, these parties denied having advanced any of the above loans to the assessee. A....
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....levied penalty for the assessment year 1980-81 at the maximum rate, the minimum imposable for that year being only Rs. 36,792. Aggrieved by the penalty orders, the assessee preferred appeal before the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) concurred with the findings of the Assessing Officer and dismissed the appeals filed by the assessee for both these years. Still aggrieved, the assessee is in appeal before us. During the course of hearing before us, the learned Authorised Representative of the assessee addressed us at large on the merits of the case and relied upon a large number of court pronouncements. In a nutshell, the learned Authorised Representative of the assessee argued that merely because the assessee's explanation regarding cash credit was not accepted, did not justify levy of penalty under section 271(1)(c). The assessee had agreed to assessment of additional income only with a view to buy peace and the same did not signify admission of any concealed income on the part of the assessee. He argued that after considerable length of time, the assessee could not be burdened with the onus to prove the cash credi....
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....ssee preferred to surrender the amounts by way of additional income. It was for this reason that the learned Commissioner of Income-tax did not accept the petition made by the assessee under section 273A to be voluntary and rejected the same. The assessee was at liberty to have his say at that stage itself but he chose to surrender the amounts in the wake of the enquiry made by the Department. Thereafter when the assessee was granted further opportunity, the assessee did not avail of the same merely under the pretext of lapse of time. Under the provisions of Explanation 1 to section 271(1)(c), burden to prove that there was no concealment entirely lay upon the assessee. This Explanation was applicable on the assessee all along whether or not he surrendered the amounts voluntarily or otherwise. The learned Departmental Representative placed reliance on the Supreme Court judgment in the case of K. P. Madhusudhanan v. CIT [2001] 251 ITR 9 9 in this respect. We have carefully considered the rival submissions. In this case we have not heard an appeal against the original orders of penalty under section 271(1)(c) made by the Assessing Officer. As pointed out earlier, the Assessing Off....
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....ircumstances of that case, interference with the order of the High Court was not called for. This judgment of the Supreme Court has to be read with their judgment in the case of K. P. Madhusudhanan v. CIT [2001] 251 ITR 99 (SC), that after insertion of the Explanation, the burden to prove that there was no concealment lies upon the assessee. The legal position emerging is that while from the surrender of additional income with a view to buy peace the Department cannot infer concealment, the burden would none the less remain on the assessee to be discharged during the course of penalty proceedings under section 271(1)(c), and to establish that the additional income as surrendered did not represent concealed income of the assessee. Thus, after having surrendered the amounts of cash credits during the course of assessment proceedings, the assessee was free all along to establish that the cash credits were genuine. It was for this purpose that the matter had been remitted back to the Assessing Officer but the assessee failed to avail of further opportunity directed to be given to it by the Tribunal. We shall now deal with the contention of the assessee that penalty orders passed by ....
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.... the assessment year 1980-81 is partly allowed, the appeal in I. T. A. No. 2419/Bom. of 1995 for the assessment year 1982-83 is dismissed. G. C. Gupta (Judicial Member).-I have perused the proposed order of my learned Brother carefully but could not persuade myself to agree with the conclusions as arrived at by him. The facts as detailed in paras. 1 to 7 (page 59 to 63) of the proposed order of my learned Brother may be referred to. However, at the cost of repetition, it is considered necessary to bring to close focus some facts of the case. Originally a penalty under section 271(1)(c) was levied on the assessee on account of addition of loan amount and interest paid thereon and the appeal preferred with the Commissioner of Income-tax (Appeals) was dismissed. The assessee preferred second appeal to the Tribunal against the said order of the Commissioner of Income-tax (Appeals). The Tribunal, Bombay, vide their order dated March 15, 1990, for the assessment years 1972-73 to 1985-86 allowed substantial relief to the assessee and accepted the contention of the assessee that additional income had been disclosed by the assessee in petition under section 273A of the Act mainly with a ....
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....as failed to avail of the opportunity which was granted to the assessee in terms of the Tribunal's order dated March 15, 1990. He therefore levied penalty under section 271(1)(c) for both these assessment years amounting to Rs. 73,584 for the assessment year 1980-81 and Rs. 53,849 for the assessment year 1982-83. The penalty for the assessment year 1982-83, was levied at the minimum rate prescribed while the penalty levied for the assessment year 1980-81 was at the minimum rate, the minimum imposable for the year being only Rs. 36,792. The appeal preferred to the Commissioner of Income-tax (Appeals) was dismissed vide order dated December 12, 1994. The Commissioner of Income-tax (Appeals) held that in this case the suspicion of nongenuine loans is far too strong and dismissed the appeals of the assessee. Against this order passed by the Commissioner of Income-tax (Appeals), the assessee is in appeal before us. Before concentrating on the merits of the case, I want to make it clear that in my view the contention of the assessee that penalty orders passed by the Assessing Officer on March 31, 1992, are barred by limitation of time, has no force. I agree to the legal ground of limi....
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....not avail of the opportunity to cross-examine the creditors. By not complying with the directions of the Tribunal in letter and spirit, the order of the Assessing Officer levying penalty for concealment of income is liable to be cancelled on this count alone. The loans in question were accepted per account payee cheques through brokers and their confirmation letters and PAN numbers were filed before the Assessing Officer during the course of the original assessment proceedings. The repayment of these loans were also per account payee cheques. The assessee have explained that the addition to the total income has been offered by the assessee purely to buy peace and avoid litigation and therefore requested not to impose penalty under section 271(1)(c) of the Act. The Commissioner of Income-tax (Appeals) has confirmed the penalty by concluding that "in this case the suspicion of non-genuine loans is far too strong". In my considered view the suspicion howsoever strong cannot take place of proof and is not sufficient to uphold the charge of concealment of income. Even on the merits of the case since the loans were deposited and repaid per account payee cheques through brokers and the co....
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....sessing Officer for the assessment years 1980-81 and 1982-83 ?" ORDER OF THIRD MEMBER M. K. Chaturvedi (Vice-President).-This appeal came before me as a Third Member to express my opinion on the following question : "Whether, on the facts and in the circumstances of the case and in terms of the order of the Income-tax Appellate Tribunal, Bombay Bench 'C', Bombay, dated March 15, 1990, in the case of the assessee, the learned Commissioner of Income-tax (Appeals) was justified in upholding the orders of penalty under section 271(1)(c) made by the Assessing Officer for the assessment years 1980-81 and 1982-83 ?" I have heard the rival submissions in the light of the material placed before me and precedents relied upon. Penalty for concealment was levied in respect of the following four cash credits : S. D. Parikh 1980-81 25,000 M. M. Goel 1980-81 25,000 Harish Trading Corporation 1982-83 25,000 Chandrakant P. Shah 1982-83 50,000 In the original assessments, the explanation apropos the cash credit was accepted by the Revenue. On April 27, 1983, a search under section 132 of the Income-tax Act, 1961 (hereinafter called "the Act"),....
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....ssing Officer to levy penalty for the assessment year 1980-81 at the minimum rate. He maintained the penalty for the assessment year 1982-83. The learned Judicial Member was of the opinion that penalties in the facts and circumstances of the case are not warranted. As such, the difference, has crept and the matter was referred to the Third Member. I have heard the rival submissions in the light of the material placed before me and precedents, relied upon. The learned Accountant Member justified the penalty with reference to the provisions of Explanation 1 to section 271(1)(c) of the Act. It is stated in the order that burden to prove that there was no concealment entirely lay upon the assessee. This Explanation was held to be applicable on the assessee whether or not he surrendered the amount voluntarily or otherwise. Explanation 1 to section 271(1)(c) reads as under : "Explanation 1.-Where in respect of any facts material to the computation of the total income of any person under this Act,- (A) such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer or the Commissioner (Appeals) to be false, or (B) such per....
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.... make a declaration upon any subject, (iii) makes any statement, which is false, and (iv) which he either knows or believes to be false, or does not believe to be true. Apropos the shifting and weighing of evidence, the law in this regard is canonized in the dictum : "falsus in uno, falsus in omnibus". False in one thing, false in everything. This maxim relates to credibility of witnesses, for a witness caught telling a lie in one thing discredits himself in regard to the rest of his testimony. Although the doctrine of falsus in uno, falsus in omnibus is applicable in criminal law, in the case of Amal Kumar Chakraborty v. CIT [1994] 207 ITR 376, 390 (Cal) it was held that this doctrine is a sound principle to apply in taxation when the matter is one of finding of fact on the basis of statements of a witness and their judicial evaluation. In this case, in 1975, the assessee gave a false statement by stating that he had no connection with the bank deposits. Later he made a volte face and said that the deposits were from the money supposedly declared in 1971. Therefore, the later statements of the assessee could not be held to be credited as the source of the deposit. The ape....
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....th and to buy peace." The Tribunal placed reliance on the decision of the apex court rendered in the case of Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705, in support holding as under (page 713) : "We find that the assessee admitted that these were the incomes of the assessee but that was not an admission that there was deliberate concealment. From agreeing to additions, it does not follow that the amount agreed to be added was concealed income. There may be a hundred and one reasons for such admission, i.e. when the assessee realises the true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the mens rea of a quasi-criminal offence." The High Court agreed with the view taken by the Tribunal. It was held that the initial burden lies on the Revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation, which is found to be false by the Assessing Officer. However, the proviso to Explanation 1 provides for shiftin....
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....r concealment. The apex court in the case of Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai, AIR 1976 SC 1455 (at pages 1467-68), has held that the ruling of a superior court is not of scriptural sanctity but it is of ratio-wise luminosity within the edifice of facts where the judicial lamp plays the legal flame. Each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid temptation as said by Cardozo, by matching the colour of one case against the colour of another. I find that there is absolutely no conflict between the decisions of the apex court rendered in the cases of CIT v. Suresh Chandra Mittal [2001] 251 ITR 9 and K. P. Madhusudhanan v. CIT [2001] 251 ITR 9 9. These two decisions were rendered in the context of two different situations. Therefore, it is necessary to see the text and context of the decisions before applying the ratio decidendi. In the present case I find that the addition was made purely on the basis of declaration made by the assessee. There is no clinching evidence as regards to the concealment. ....