TaxTMI 
TaxTMI 
1985 (10) TMI 50
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee-company was maintaining two sets of accounts to avoid disclosure of true income to the Income-tax Department and the ones produced in the court were the secret account of the assessee which showed much higher income for the four years with which we are concerned. On receipt of the information from the criminal court, the Income-tax Officer reopened the assessment proceedings under section 34(1)(a) of the Indian Income-tax Act, 1922, and reassessed the income as follows: Year Amount Rs. 1950-51 1,26,662 1951-52 1,49,705 1952-53 1,11,617 1953-54 1,54,845 Against the aforesaid reassessment, the assessee took the matter in appeal before the Tribunal. The Tribunal confirmed the finding of the Income-tax Officer that the assessee had been maintaining two sets of accounts, one for the purpose of the Income-tax Department and the other for the purpose of distribution of concealed income amongst the shareholders. It also confirmed the finding of the Income-tax Officer that the four diaries produced in the criminal court belonged to the assessee and that substantial income had been concealed by the assessee which had not been shown in the returns. However, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re was no proof on the record that the estimated income was really earned by the assessee and in the absence of proof of positive concealment, no penalty was leviable for those three assessment years. As regards assessment year 1952-53, the Explanation to section 271 (1)(c) of the 1961 Act was applied for the same reason on which the Inspecting Assistant Commissioner had applied the Explanation. The Tribunal then proceeded to hold as follows, keeping in view the dictum laid down in CIT v. Patna Timber Works [1977] 106 ITR 452 (Pat): "...The onus which lay on the assessee under the Explanation has to be seen in this light. The question is whether the assessee company has concealed the income estimated by the Appellate Tribunal on optimum basis due to any fraud or gross or wilful negligence. The answer is very clear. Concealed income has been recomputed by the Appellate Tribunal on estimate basis. As it is not proved that the income estimated by the Appellate Tribunal was positively concealed by the assessee, it would be difficult to hold that the assessee company had known earlier about the concealed income as estimated by the Appellate Tribunal. Since the concealed income est....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e evidence emerging from the four diaries, the Tribunal held that substantial income had been concealed and the true and full income from the transport business was not shown in the returns filed. These very findings were given by the Income-tax Officer in reassessment proceedings as also by the Inspecting Assistant Commissioner in the penalty proceedings. The Tribunal departed from those findings in the penalty proceedings only to the limited extent that because the income was computed on optimum receipt basis, it impliedly inferred that the Tribunal in assessment proceedings did not place reliance on the diaries. The Tribunal specifically made the following observations: " The position would have been different if the concealed income was computed on the basis of the entries made in the four dairies." What was to be seen in the penalty proceedings was whether there was material before the Tribunal for recording a finding that the assessee concealed the particulars of its income or deliberately furnished incorrect particulars of such income and if there was material, then penalty could be levied. The law, in this behalf, has been settled by the Supreme Court in Anwar Ali's c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the tax is good evidence although not conclusive. It is also clear that before penalty could be imposed, the entirety of the circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars of income. While applying the aforesaid dictum to the facts of the present case, it is more than clear and plain that in the reassessment proceedings, the Tribunal found that the assessee had maintained two sets of accounts, one for the purpose of the Income-tax Department and another for the purpose of distribution of concealed income amongst the Shareholders. It also believed that the four diaries produced by the accused before the criminal court belonged to the assessee. On the basis of the evidence emerging from the four diaries, the Tribunal concluded that substantial income had been concealed by the assessee and the full income from the transport business was not shown in the returns filed by the assessee. While considering this matter in the penalty proceedings, the Tribunal although it referred to the aforesaid facts, yet conc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the dictum laid down in Anwar Ali's case [1970] 76 ITR 696 (SC). The entire stress of the argument on behalf of the assessee was that since the estimate was made on the basis of the optimum receipt basis, such figure could never be treated as the income of the assessee. On the facts of this case, we are not impressed with this argument. It is not a case where some entry is found in the books of account of the assessee or is found in the bank account of the assessee or some amount is found in its hands from undisclosed sources and he furnished his explanation for the same which does not satisfy the Income-tax Officer in assessment or reassessment proceedings. Therefore, by rejecting the explanation, the amount is treated as income from undisclosed sources as was done in Anwar Ali's case [1970] 76 ITR 696 (SC). But, in the present case, we have the four diaries which clearly go to show that they are in regard to the transport business of the assessee and that they are keeping duplicate sets of accounts relating to the transport business and whatever figures are shown in the secret diaries, those were divided between the shareholders as the income from the transport business. ....