TaxTMI 
TaxTMI 
2003 (2) TMI 158
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....oans to the assessee which as per the assessee's books of account were as follows:-- Name of the party Assessment year Amount involved S.D. Parikh 1980-81 Rs. 25,000 M.M. Goel 1980-81 Rs. 25,000 M/ s. Harish Trading Corpn. 1982-83 Rs. 25,000 Chandrakant P. Shah 1982-83 Rs. 50,000 3. By application dated 29-6-1983 the assessee filed a petition under section 273A before the learned CIT, Bombay City V....
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....nbsp; Rs. 2,95,398 1982-83 Rs. 2,03,920 1983-84 Rs. 2,40,920 1985-86 Rs. 59,790 Aggrieved by penalty imposed in the manner above-mentioned, the assessee filed appeal and subsequently the matter was carried on to the Tribunal. ITAT, Bombay Bench 'C', Bombay, as per its order dated 15-31990 in ITA Nos. 2057 to 2063/Bom./89, 6905 to 6908/Bom./89 and 8098/ Bom./89 accepted the contentions of the assessee that additional income had been disclosed by the assessee mainly with a view to buy peace and the same did not indicate concealment of income in all other aspects except the four cash creditors in respect of which the creditors den....
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....nt P. Shah 1982-83 . Rs. 50,000 As per the report of the ITO dated 19-6-1985 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 the 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 so far as the penalty relatable to these four parties is concerned for the assessment years 1980-81 and 1982-83, we remit the matter back to the ITO, who shall, after giving adequate opportunity of hearing to the assessee re-decide this issue according to law. As regards others the sequence of events reveal that the amounts were offered for taxation to buy peace and avoid litigation with the condition that no penalty for concealment should be imposed. The additions made are only on the basis of settlement petition no other evidence independently exists to make these additions. This being the position the assessee cannot be visited with any penalty under section 271(1)(c) of the Act for c....
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....ncome 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 Hon'ble Supreme Court in the case of CIT v. Suresh Chandra Mittal [2001] 251 ITR 91; S. Hastimal v. CIT [1963] 49 ITR 273 (SC) and judgment of Hon'ble Bombay High Court in the case of Orient Trading Co. v. CIT [1963] 49 ITR 723. In addition, the learned authorised representative of the assessee contended before us that he was supplied copies of the statements of these four cash creditors, which had been recorded behind the back of the assessee, only on 20-3-1992 while the impugned penalty orders had been made by the Assessing Officer on 31-3-1992. The assessee was therefore, not granted proper opportunity to rebut the inferences drawn by the Assessing Officer on the basis of the statements which had been recorded behind the back of the assessee. The learned authorised representative cited the judgment of Hon'ble Supreme Court in the case of Bhopal Sugar Industries v. ITO [1960] 40 ITR 618 in this respect. Secondly, th....
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....vied penalty under section 271(1)(C) involving huge amounts for a very large number of assessment years. The same were heard together by ITAT, Bombay Bench 'C' and all the contentions of the assessee, on merits, were considered and after consideration the Tribunal was agreeable to delete penalty levied upon the assessee in all other respects except these four cash creditors. Having regard to the submissions of the learned counsel of the assessee that copies of the confessional statements of the loan creditors had not been made available to the assessee, thus denying to it the chance of cross-examination, the Tribunal remitted the matter back to the Assessing Officer to redecide this issue after giving adequate opportunity of hearing to the assessee. Viewed in this backdrop, we hold that the learned Assessing Officer was justified in drawing an inference against the assessee and repeating the levy of penalty in this respect as the assessee did not avail of the opportunity to cross-examine the creditors in question. During the course of hearing before us the learned authorised representative of the assessee laid emphasis on the fact that copies of the statements had been given to the....
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....epresentative of the assessee has placed reliance on the provisions of section 275(1)(a) in this respect. The limitation of time envisaged under the provisions of section 275(1)(a) is in respect of penalty orders to be made for the first time. It is not the case of the assessee that original order of penalty itself was barred by limitation of time. No such plea was taken before the Tribunal in the proceedings which culminated in the order of ITAT, Bombay Bench 'C', Bombay on 15-3-1990. The fresh orders of penalty have been made by the Assessing Officer in consequence of the Tribunal order dated 15-3-1990. We hold that in such a situation the provisions of section 275(1)(a) had no application at all. It is settled legal position that limitation of time laid down for passing of a particular order would not apply when the order is directed to be made afresh by an appellate authority. The limitation of time is in respect of original order of penalty only. The decision of the Tribunal reported in Smt. Shardaben's case relied upon by the learned authorised representative of the assessee related to penalty order being made by the Assessing Officer for the first time. The judgment of Hon'b....
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....able to the assessee, thus denying to it the chance of cross-examination. The Tribunal therefore in so far as penalty relatable to these four parties for the assessment years 1980-81 and 1982-83, remitted the matter back to ITO with the directions to give adequate opportunity of hearing to the assessee and re-decide this issue according to law. The penalty levied for concealment of income under section 271(1)(c) on all other items of additional income was cancelled by the Tribunal. 2. Thereafter the Assessing Officer issued a show-cause notice to the assessee vide letter dated 7-3-1992 to show-cause why penalty under section 271(1)(c) may not be imposed on the assessee. In reply to this notice of the Assessing Officer, the assessee's Chartered Accountant filed letter dated 10-3-1992 before the Assessing Officer and requested to furnish the copies of the statements as recorded behind the back of the assessee during the assessment proceedings in the year 1984. The authorised representative of the assessee also explained the facts in detail and further submitted that since these loans were accepted/repaid by account payee cheques, their address and their confirmation letter and PAN N....
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....hat adequate opportunity of hearing was not afforded to the assessee and accordingly remitted the matter back to the Assessing Officer with the directions to redecide this issue according to law after giving adequate opportunity of hearing to the assessee. In the light of the directions given by the Tribunal we have to decide whether in the facts and in the circumstances of the case it can be said that adequate opportunity of hearing has been allowed to the assessee. We find that the directions of the Tribunal directing as above are dated 15-3-1990, and the case was going to be time barred on 31-3-1992 and the Assessing Officer did not give copies of the confessional statements of the four parties to the assessee along with the first notice of hearing issued on 7-3-1992 after more than 23 months of the Tribunal's Order. The Assessing Officer had recorded the statements of the four parties behind the back of the assessee during the assessment proceedings in the year 1984 and was bound to furnish the copies thereof to the assessee and the specific directions of the Tribunal in this regard were not complied with. It was only 10 days prior to the passing of the penalty Order that the A....
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....essing Officer in this case. The decision of the Hon'ble Supreme Court in the case of Suresh Chandra Mittal and in the case of K.P. Madhusudhanan were considered by the Mumbai Tribunal in ITA No. 4016/Mum/2001 dated 21-12-2001 and it was held that in the Act of voluntary surrender done by the assessee in good faith the case of the assessee comes within the ambit and purview of the ratio of the decision laid down by the Apex Court in the case of Suresh Chandra Mittal and deleted the penalty under section 271(1)(c) imposed on the assessee. In these facts I hold that the department has not discharged its burden of proving concealment on the part of the assessee and accordingly the penalty levied under section 271(1)(c) of the Act on the assessee is cancelled and the ground of appeal of the assessee is allowed. 5. In the result the appeals of the assessee are allowed. REFERENCE UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961. Since there is a difference of opinion vis-a-vis conclusions arrived at in ITA Nos. 2418 & 2419/Bom./95 in the case of Kumar Agencies (India) v. Assistant Commissioner of Income-tax, Circle-19(2), Bombay, involving assessment years 1980-81 and 1982-83, we are ....
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....cted 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. Assessee filed a petition under section 273A of the Act, before the CIT, declaring therein additional income. Among others the aforesaid loans were also surrendered. Petition under section 273A of the Act was rejected on the ground that it was not voluntary. Penalties were levied for the assessment years 1972-73 to 1985-86. Tribunal, vide its order dated 15-3-1990 accepted the fact that the additional income was disclosed by the assessee mainly with a view to buy peace and the same did not indicate concealment of income in all the years, except for the years 1980-81 and 1982-83. In respect of these assessment years, creditor denied having made loan to the assessee. It was found that confessional statements were not made available to the assessee; thus denying to it the chance of cross-examination. As such, the matter was restored to the file of Assessing Officer, with direction to provide adequate opportunity of hearing to the assessee and to re-consider this issue according to law. Assessee contended before the re....
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....rial to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. Provided that nothing contained in this Explanation shall apply to a case referred to in clause (B) in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bona fide and all the facts relating to the same and material to the computation of his total income have been disclosed by him." 7. As because penalty was levied on the basis of the confession made by the creditor, as such the learned AM invoked the Explanation 1. He found the explanation offered in the context as false and bereft of bona fide, therefore he applied the ratio laid down in the case of K.P. Madhusudhanan. Learned JM discussed the factual aspects and applied the decision rendered in the case of Suresh Chandra Mittal. 8. According to Blacks Law Dictionary, "false means not true. The word "false has two distinct and w....
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.... the amount which is found to be concealed therefore, the whole idea behind Explanation 1 is that the Assessing Officer has to first record reasons for arriving at a conclusion that there is a failure on the part of the assessee. Hence, after seeking an explanation if the authority comes to a conclusion that it is false, then the Assessing Officer can proceed to levy the penalty. Therefore, this Explanation cast a duty on the Assessing Officer that he should first record reasons that there has been concealment of income and then the explanation is sought. These are the basic requirements of natural justice desired by the Legislature for providing this Explanation. Therefore, the initial burden is on the Department to prima facie record that there was concealment and thereafter the explanation is to be sought and in case the explanation is found to be false, then to the extent the income is found to have been concealed and the explanation is found to be false, then the authority can proceed against the assessee. 12. In the case of CIT v. Suresh Chandra Mittal [2000] 241 ITR 124 (MP) action under section 132 was taken against the assessee. This led to reopening of the assessment. As....
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.... interference with the order of the High Court is called for." 13. Adverting to the decision of the Apex Court rendered in the case of K.P. Madhusudhanan learned Departmental Representative submitted that this decision was rendered on August 21, 2001. Hence, the ratio of this decision is to be followed. In this case, assessee took certain Bank drafts for payments to suppliers of rice in Andhra Pradesh. Entries were made in the accounts not on the dates on which the drafts were obtained but a few days later. It was explained that sufficient cash balance was not available on those dates. Loans were obtained from friends. These loans were payable within a short time, as such no entries were made in the books. Since the assessee was unable to furnish evidence of such loans, it offered the amount for addition. Penalty proceedings were initiated. Assessing Officer did not accept the explanation of the assessee. Penalty was imposed the Tribunal cancelled the penalty on the ground that in the notice initiating penalty proceedings assessee was not intimated about the proposed action under Explanation 1(B) to section 271(1)(c). High Court held the imposition of penalty valid. Apex Court aff....