TaxTMI 
TaxTMI 
1972 (12) TMI 6
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....oceedings in pursuance of those notices, the assessee surrendered certain amounts which it had shown as loans of third parties at the time of earlier regular assessments. The Income-tax Officer accepted those surrenders and made orders of reassessment alter affording an opportunity to the assessee-firm to prove that the credits on the basis of hundis shown in the names of third parties were genuine credits. At that time, the assesseefirm, instead of proving that fact, gave a statement surrendering those amounts to be treated as its income of the year from undisclosed sources. Thereafter, proceedings for imposition of penalty were initiated against the assessee-firm. In those proceedings, it was pleaded by the assessee that it should be give....
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....se circumstances that the Appellate Tribunal, Chandigarh Bench, has drawn the statement of the case, and has referred the above mentioned question for our opinion. It was strenuously contended before us by Mr. Sharma that the penalty proceedings are penal in character, that it was for the department to establish that the amounts surrendered constituted their income and that the mere fact that the amounts were surrendered during the course of assessment proceedings would be no ground to impose the penalty on the assessee. It was also contended by the learned counsel that the Inspecting Assistant Commissioner did not give any opportunity to the assessee-firm to prove their assertions, and that penalties were imposed illegally. On the other....
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....sessment. It is in the light of the observations made by their Lordships of the Supreme Court in the above-said two decisions that this case has to be decided. On the respective contentions of the learned counsel for the parties, the first question that requires determination is whether any opportunity was afforded to the assessee-firm for leading evidence during the course of penalty proceedings initiated by the Inspecting Assistant Commissioner. From the statement of case we find that the Inspecting Assistant Commissioner refused to give opportunity to the assessee-firm to prove its assertions that the credits on the basis of hundis in favour of third parties, which the assessee-firm had surrendered during the course of assessment proc....
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....urther proof is required regarding the concealment of income when the assessee itself surrendered the amount for assessment. I see no reason why the assessee should agree to be assessed on the hundi loans unless it was the concealed income of the assessee. " This to our mind was not a legal way of proceeding with the matter. Even treating the fact of surrender as an admission of the concealment of undisclosed income, with which we do not agree, the Inspecting Assistant Commissioner could not deny the assessee its right to prove that the fact of surrender was no such admission and that the so-called admission was in fact wrong and the surrender was made simply to avoid botheration. It is an established principle of law that a party is ....
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....the assessment proceedings and are in the nature of quasi-criminal proceedings. The onus was on the department to positively prove and produce for that purpose, certain other material besides the factum of surrender that the amounts in dispute were the undisclosed income of the assessee. We agree with Mr. Sharma, learned counsel for the assessee, that the mere fact of surrender could not necessarily be an admission of the assessee that the amounts surrendered were its undisclosed income. The surrender by the assessee could have been for more than one reason in spite of the fact that it was not his income and that fact alone could not be the basis of imposing penalty as has been done in the present case. This view of ours finds full support ....