1994-VIL-251-MAD-DT

Equivalent Citation: [1994] 208 ITR 377

MADRAS HIGH COURT

Date: 18.01.1994

COMMISSIONER OF INCOME-TAX

Vs

V. RANGASWAMI NAIDU

BENCH

Judge(s)  : VENKATASWAMY., RANGARAJAN 

JUDGMENT

The judgment of the court was delivered by

VENKATASWAMI J. -The following two questions are referred for our decision:

"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in holding that the assessee had not concealed particulars of his income and, accordingly, in cancelling the penalty of Rs. 29,000 imposed under section 271(1)(c) for the assessment year 1967-68 ?

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that mere disbelief of the evidence of Nanjappa Devar's son is no ground for the levy of penalty under section 271(1)(c) of the Income-tax Act ?"

For the assessment year, among other items, the assessee claimed that he has borrowed a sum of Rs. 29,000 from one Nanjappa Devar. This claim of the assessee was not accepted by the Income-tax Officer and consequently that amount was included in the assessee's income. Since he has not accepted that the sum of Rs. 29,000 was borrowed, penalty proceedings were initiated under section 271(1)(c) of the Income-tax Act and penalty also was levied by the Inspecting Assistant Commissioner.

The Appellate Tribunal on appeal held as follows:

" Having regard to the facts and circumstances of the case, we are inclined to hold that by merely disbelieving the evidence of Nanjappa Devar's son there is no ground for the levy of penalty under section 271(1)(c). "

On that ground the penalty levied was cancelled. Aggrieved by that order, at the instance of the Revenue the abovesaid two questions were referred.

It is not in dispute that the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696 has held that the fact that the assessee's explanation regarding a cash credit or other receipt is disbelieved and the amount is assessed in his hands, does not by itself justify the Department in imposing a penalty : the circumstances of the case must be such as to lead to the reasonable and positive conclusion that the amount represents the assessee's income. The same ratio has again been reiterated by the Supreme Court in Anantharam Veerasinghaiah and Co. v. CIT [1980] 123 ITR 457.

Having regard to the finding of the Tribunal as set out above and in view of the ratio laid down by the Supreme Court as mentioned above, we find no difficulty in answering the questions in the affirmative and against the Revenue. No costs.

 

 

 

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