TaxTMI 
TaxTMI 
2002 (11) TMI 792
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.... 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 ₹ 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 147, the Assessing Officer initiated penalty proceedings under sect....
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....income disclosed of more than ₹ 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. As per the submissions of learned counsel for the assessee, copies of their confessional statements were not made available to the assessee, thus denying to it the chance of cross-examination. In....
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....fore 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 credits. A number of case laws were relied upon for these propositions. He in particular emphasised the judgments of the hon'ble Supreme Court in the case of CIT v. Suresh Chandra Mittal [2001] 251 ITR ....
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....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 Officer levied penalty under section 271(1)(c) involving huge amounts for a very large number of assessment years. The same were heard together by the Income-tax Appellate Tribunal, Bombay Bench "C", and ....
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....T [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 the Assessing Officer on March 31, 1992, are barred by limitation of time. The learned Authorised Representative of the assessee has placed reliance on the provisions of section 275(1)(a) in this respect. ....
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....y 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 view to buy peace and the same do not indicate concealment of income in all other aspects except the four cash creditors in respect of which the creditors denied having made loan to the assessee. The Tribunal no....
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....ounting to ₹ 73,584 for the assessment year 1980-81 and ₹ 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 ₹ 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 limitation of time as detailed in para. No. 10 (page 65) of the proposed order of my learned Brother rejecting the plea of the assessee relating to limitation of time. On merits of the case, in my considere....
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.... 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 confirmations were filed on record and PAN numbers of the creditors were filed before the Assessing Officer at the first opportunity during the course of assessment proceedings, in the absence of any proof a....
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...., 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"), was conducted at the premises of the assessee. During the course of the search certain enquiries were made. The aforesaid cash creditors denied having made loans to the assessee. The assessee filed a petition under section 273A of the Act, before the Commissioner of....
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....ted. 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 person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed....
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....s". 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 apex court in the case of Rajinder v. State of Haryana [1995] 5 JT 272, 283 (SC), has held that court has to endeavour to separate the grain from the chaff and accept that part of the evidence which is found to be truthful and consistent. As per Explanation 1, if the Assessing Officer finds that the explanatio....
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....n 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 shifting of this burden again where the explanation offered by the assessee is found to be bona fide. The Supreme Court vide its judgment dated July 26, 2001 (CIT v. Suresh Chandra Mittal [2001] 251 ITR 9 ) affirmed the view taken by the Madhya Pradesh High Court in the case of CIT v. Suresh Chandra Mittal [2000] 241 ITR 124. The follo....
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....n 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. Principles of natural justice require that confessional statement should be made available to the assessee and it should be provided with an opportunity to cross-examine the witness. It is admitted fact that the loan transactions were made through brokers. After a lapse of period over a decade the assessee expressed inability to produce the parti....