TaxTMI 
TaxTMI 
1996 (1) TMI 149
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....nwhile assessee filed a settlement petition before the Settlement Commission on 31-10-1983 pertaining to assessment years 1979-80 to 1983-84. The said petition was accepted for all the years except for assessment year 1982-83. The petition for 1982-83 was rejected on the ground that concealment was likely to be established by the department. 3. In the course of assessment proceedings the Assessing Officer asked assessee to file the details of cash creditors. Summons under section 131 were issued by him to twenty-two parties at the addresses furnished by the assessee but the same remained unserved with the remarks that such parties were not available at such addresses. The Assessing Officer vide his letter dated 17-12-1985 informed the assessee about this fact and further asked the assessee to produce the parties along with the books of account and pass books. Since the assessee was not able to produce these cash creditors except in the case of K.B. Shah HUF, it filed a revised return on 31-3-1986 under the amnesty scheme offering an additional income of Rs. 7 lakhs which comprised of the following : Rs. (i)&....
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....maining parties only interest had been paid on the loans taken from them in earlier years. It was further submitted that out of these 24 parties, 10 parties were covered under the return filed on 31-3-1986 under the amnesty scheme. Out of 14 parties 5 had already been before the Assessing Officer and given their statements to him. Regarding remaining 9 parties, it was submitted that these are covered by the petition under section 273A. 5. It may also be noted that on 16-1-1987 the Assessing Officer also issued a letter to the assessee informing that summons had been issued to Miss Rekha Ganeshan, a film actress for examination to be held on 22-1-1987. He asked the assessee to remain present during her examination/cross-examination. This summon had been issued because she had stated in her statement dated 9-11-1982 recorded under section 131 by the ADI Unit-III (5) that she had purchased certain jewellery from the assessee firm on 15-5-1981 against the cash payment. The statement of Miss Rekha Ganeshan was, however, recorded by the Assessing Officer on 25-3-1987 wherein it was stated that she had visited the shop of the assessee but the jewellery was purchased through some other pe....
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....ies along with the books of accounts, pass book, etc., so as to prove the identity capacity and genuineness of these cash creditors. It was further stated by him that in case assessee finds any difficulty in producing them, it may collect "Dasti summon" from the Income Tax Office. In response to this letter, assessee vide its letter dated 25-1-1989 stated that confirmation letters and affidavits of these parties along with their GIR Nos./PA Nos. have already been given by it. It was further stated that the relevant information may be collected from their respective income tax records. It was also stated that its case was covered by the various circulars of CBDT and, therefore, no penalty could be levied. It referred to answers to question Nos. 1, 4, 19 and 20 mentioned in the CBDT circular No. 451 dated 17-2-1987 in support of its stand. The Assessing Officer again issued a letter dated 25-1-1989 to produce these parties but none of them could be produced by the assessee. Finally, the Assessing Officer rejected the contention of the assessee relating to amnesty scheme and also on merits and imposed the impugned penalties under section 271(1)(c) and under section 273. These penaltie....
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....he relied heavily on the decision of the Tribunal in the case of B. Tex Corpn. v. ITO [1993] 46 ITD 61 (Bom.) (T.M.) wherein the Third Member has taken a view that the amnesty scheme cannot be applied to a case where the facts were similar to the present case. In addition to this, he relied on the decision of the Bombay Bench of the Tribunal in the case of Asstt. CIT v. Dalamal & Sons Investment Co. [1994] 49 ITD 80 and of Ahmedabad Bench in the case of Asstt. CIT v. Ilaxi Textiles Industries [1994] 49 ITD 330. 8.1 On merits, it was contended by him that the CIT(A) was not justified in holding that there was no concealment of particulars of income or furnishing of inaccurate particulars of income by the assessee and no penalty could be imposed as the case of the assessee fell within the ratio of the Supreme Court decision in the case of Sir Shadilal Sugar & General Mills Ltd v. CIT [1987] 168 ITR 705. His submission was that in regard to the genuineness of the cash credit the burden lies on the assessee to prove the same and in his support he relied on the two judgments of the Supreme Court as Sumati Dayal v. CIT [1995] 214 ITR 801 and CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR....
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....order to buy peace with the department. He further submitted that the ratio of the judgment of the Apex Court in the case of Sir Shadilal Sugar & General Mills Ltd. applies to the facts of the present case. In support of his contention he also relied on the various judgments of High Courts and Tribunal which are as under : (i) Varkey Chacko v. CIT [1993] 203 ITR 885 (SC) (ii) Vir Khanna v. IAC [1995] 52 ITD 652 (Asr.) (iii) Ambassador Dry Cleaners v. Union of India [1995] 80 Taxman 125 (Raj.) (iv) Bombay Cloth Syndicate v. Asstt. CIT [1995] 79 Taxman 352 (Bom.) (v) Asstt. CIT v. Manorajyam [1993] 54 ITD 116 (Coch.) (vi) Asstt. CIT v. Prakash Oil Industries & Ginning Factory [1995] 52 TTJ (Ahd.) 514 (vii) ITO v. P.M. Suthar [1995] 214 ITR 12 (Ahd.) (Trib.) (viii) Jaikishan Gopikishan & Sons v. CIT 74 CTR (Chd.) 8 (Trib) (ix) Laxman v. CIT 75 CTR (Bom.) 76 (x) Anand Kumar Saraf v. CIT [1994] 75 Taxman 320 (Cal.) (xi) J.B. Naik v. Dy. CWT [1993] 45 TTJ (Ahd.) 206 (xii) ITO v. Ram Nihora Thakur [1993] 46 ITD 90 (Pat.) (xiii) WTO v. Nand Kumar Pd. Shah [1992] 41 ITD 406 (Pat.) (xiv) Shama Raising Chandel v. ITO [1992] 41 ITD 212 (Ahd.) (xv) Uttamchand Bhutani & Co v. ITO ....
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....ent of income. 2. This order shall come into force on the 17th day of February, 1986. (Sd.) S.K Roy, Member (Investigation) Central Board of Direct Taxes. F. No. 281/8/86 I.T. (INV. III). The bare reading of the aforesaid order clearly shows that in order to claim immunity from imposition of penalty, assessee must satisfy the following conditions : (i) that the assessee must make full and true disclosure of its income; (ii) the disclosure must be voluntarily and in good faith; and (iii) that such disclosure must be prior to detection by the Assessing Officer. It will also be pertinent to refer to the answers to question Nos. 1 & 21 mentioned in the circular No. 451 which are relevant in this regard and are being reproduced as under : " Question No. 1 --- What will be the procedure required to be followed by the assessee who wants to declare income or wealth in respect of the past years ? (a) in case where the assessments pertaining to those years are already completed; (b) in case where the assessments in respect of those years are pending. Answer. --- In case where the assessments are already completed, the taxpayer should approach the concerned Commissioner of Incom....
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....ndered by the assessee. Since the assessee was unable to prove the genuineness of the cash credits, it filed another revised return on 30-3-1987. Had the Assessing Officer not made further investigations, assessee would have escaped from being taxed in respect of its income which had been surrendered in the second revised return filed on 30-3-1987. In these circumstances, it could not be said that assessee made full and true disclosure honestly. The view which we have taken is further supported by the decision of the Tribunal Bombay Bench in the case of B. Tex Corpn. wherein the Third Member has taken a similar decision on similar set of facts. 11. The case law relied upon by the learned counsel for the assessee in this regard do not help him. None of the cases relied upon by him deals with a case where disclosures were made in piecemeal. In all the cases the facts were entirely different inasmuch as the disclosure was made truly and fully. Hence, the contention of the assessee cannot be accepted as it has not fulfilled the most important condition of making full and true disclosure as specified in the order of the CBDT under section 119(2). In the Madhya Pradesh High Court decisi....
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....sessee to Miss Rekha Ganeshan, (b) 2,78,788 on account of disallowances of interest in respect of loans pertaining to earlier years which was substituted by Assessing Officer to Rs. 4.5 lakhs, and (c) 10,07,985 on account of cash credits introduced in the books of account during the year under consideration and the interest thereon (9.10 lakhs + 97985) --------- 17,36,773 --------- rounded off 18,50,000 --------- 13. First we take up the surren....
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....ement, in our opinion, may be relevant for making an addition in her case, but it certainly cannot be the sole basis for making the addition in the hands of the assessee unless the assessee is given an opportunity to rebut the same. The revenue has made inquiries from the employees of the assessee who could not tell anything in this regard. Miss Rekha Ganeshan was examined by the Assessing Officer in the course of the assessment proceedings in the case of assessee. Her statement does not establish that the jewellery was purchased from the assessee. It has been stated by her in the statement that she visited the shop of the assessee but somebody was introduced by the partner of the firm through whom the alleged purchase of jewellery was made. The answer to question No. 2 is reproduced as under : " Ans. (2) --- On 14-5-1981, I had visited TBZ and Sons, Opera House, Bombay for purchase of jewellery in the premises of TBZ and Sons, Opera House, Bombay. The jewellery was shown by a person who was introduced as a broker by their partner Shri Vajubhai. On finalisation of the deal, cash was handed over to the same person in the presence of Vajubhai. " 14. The statement of Miss Rekha Gane....
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....f cash credits of Rs. 9,10,000 and interest thereon amounting to Rs. 97,985. The fist of the cash creditors which are to be considered by us is as under : Rs. (i) M/s Uday Trading Co. 50,000 (ii) Jain Trading Co. 50,000 (iii) Mehta Enterprises 50,000 (iv) Ratan Trading & Co. 50,000 (v) Gautam M. Jain. 50,000 (vi) Kesri Textiles 50,000 (vii) Saraswati Trading Co. 50,000 (viii) Kiranraj ....
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....ce the cash creditors. The list of the parties not found in the income tax records was given in that letter. Again in the penalty proceedings this fact was also confronted by the Assessing Officer to the assessee vide his letter dated 18-1-1989. Thereafter another opportunity which was finally given to the assessee to produce them by his letter dated 25-1-1989 as the assessee recently had been able to obtain their affidavits. In spite of all these opportunities, assessee was not able to rebut the stand of the revenue, regarding identity and genuineness of the cash creditors. 17. After perusing the above facts, we have to categorise the cash credits into two parts. First-those cash credits in respect of which the Assessing Officer has found that the particulars given by the assessee were inaccurate ; and second - those cash credits where particulars given by the assessee remained uncontroverted. The former category includes the cash credits appearing at serial Nos. 1 to 15 mentioned in para 16 amounting to Rs. 7.45 lakhs. This has been found by us from the perusal of the list of the parties not found on the income tax record as per the letter of the Assessing Officer dated 17-12-19....
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....ting to Rs. 3.75 lakhs and interest thereon are concerned, we are of the opinion that no penalty can be levied inasmuch as the revenue had not been able to establish that the particulars filed by the assessee were inaccurate. The assessee had given all the particulars including the GIR numbers. The Assessing Officer has made his own inquiries and nothing against them has been found by him. Merely because, summons were not served on them, assessee cannot be penalised. The ratio of judgment of Apex Court in the case of Orissa Corpn. (P.) Ltd. squarely applies in respect of such cash credits. Hence, we uphold the order of the CIT(A) in respect of such cash credits. 19. Lastly before parting with our judgment, we would like to mention the judgment of the Supreme Court in the case of Varkey Chacko on which reliance has been placed by the assessee. In that case the Supreme Court was concerned with the issue regarding the jurisdiction of the authority who could impose the penalty. The learned counsel for the assessee relied upon certain observations to the effect that penalty could be imposed only where the Assessing Officer is satisfied that there has been concealment or furnishing of i....