1991-VIL-125-ITAT-

Equivalent Citation: ITD 038, 249, TTJ 040, 600,

Income Tax Appellate Tribunal BOMBAY

Date: 27.03.1991

SHASHI RAJ KAPOOR.

Vs

INCOME-TAX OFFICER.

BENCH

Member(s)  : O. P. JAIN., R. P. GARG.

JUDGMENT

Garg, AM --- These three appeals are by the assessee against the order of the CIT(A) confirming the penalties levied by the assessing officer under section 271(1)(c) of the Income-tax Act, 1961 for the Assessment years 1979-80, 1980-81 and 1982-83. For the sake of convenience, all the appeals are being disposed of by this consolidated order.

2. The relevant facts, in brief, are that on 22-10-1982, a search was carried out at the office and residence of the assessee and also at the residence of Mr. Narendra Jaitly, the Chief Executive of Film-walas, a concern closely connected with the assessee. Certain books and documents along with a cash of Rs. 1,48,524 were seized therein. The cash was seized from Mr. Narendra Jaitly's residence but claimed to have been given to him by the assessee. As it was not properly explained, it was retained under section 132(5) of the Act by an order dated 20th January, 1983, wherein the estimated concealed income was made at Rs. 11 lacs for the assessment year 1983-84 and Rs. 10 lacs for assessment year 1982-83. As the assessments involved were completed, the assessee's appeal under section 132(11) was rejected by the CIT as infructuous.

3. In the meantime, on 10-1-1983, the assessee made an application to the CIT for agreed assessment for the assessment years 1979-80 to 1982-83, offering additional income of Rs. 17.5 lakhs over and above the returned incomes for those years Rs. 10.5 lakhs for assessment year 1979-80 ; Rs. 2 lakhs each for assessment years 1980-81 and 1981-82 ; and Rs. 3 lakhs for assessment years 1982-83. It was before the department scrutinised the seized material and to buy peace, inter alia, with the following request :

" (v) No action for penalty under sections 271(1)(a), 271(1)(b), 271(1)(c) and 273 or under any other sections of the Income-tax Act and section 18 of the Wealth-tax Act, shall be initiated against me for assessment years 1978-79 to 1982-83 and if already initiated the same shall be vacated.

(vii) I shall be allowed to capitalise a sum of Rs. 15,00,000 as cash in hand as on 31-3-1982 over and above cash in hand disclosed in the books of account of Film-walas on that date.

(viii) The addition already made for the assessment year 1979-80 in respect of loans and interest on 'unproved loan' and disallowance out of cost of production shall be deleted. The action already initiated for reopening of income-tax assessment for assessment year 1978-79 shall be dropped.

(ix) I reiterate that for all the years under reference all the loans appearing in the books of account of M/s. Film-walas are genuine. However, if for any reason I am unable to prove the genuineness of certain loans then no addition shall be made to my total income if the peak amount of such loans and interest thereon does not exceed Rs. 17,50,000 during the years under reference and till 31-3-1982. But if the amount of such 'unproved' loans and interest thereon exceeds the sum of Rs. 17,50,000 then only excess of Rs. 17,50,000 will be added to my total income.

(x) The cash of Rs. 1,48,524 seized will be deemed to be explained and will be retained and applied towards the discharge of anticipated tax liability on the income hereby voluntarily disclosed by me.

(xi) My income-tax and wealth-tax assessments up to and including assessment year 1982-83 will be completed without making any further additions and disallowances out of cost of productions of pictures, except mentioned in foregoing paras (ii) & (iii). The assessments for connected cases may also be completed simultaneously. "

It appears that the assessee had agreed for the assessment of Rs. 19 lakhs as against Rs. 17.5 lakhs offered in the application dated 10-1-1983. In assessment year 1979-80, the Assessing Officer made an addition of Rs. 9,55,025 (Rs. 8,20,025 on account of alleged loan and interest thereon and Rs. 1,35,000 on account of credit to Prithviraj Kapoor Memorial Trust). In the assessment year 1980-81, an addition of Rs. 5,12,550 was made, including Rs. 2,12,550 on account of interest on the loans and Rs. 3 lakhs on account of unaccounted receipts from the film 'Suhag'. In the assessment year 1982-83, an addition of Rs. 3,45,000 was made consisting of the unaccounted receipts of Rs. 3 lakhs from the film 'Suhag' and Rs. 45,000 on account of unaccounted professional receipts. The assessee had capitalised Rs. 15 lakhs on account of this offer as on 1-4-1982.

4. The ITO, in these circumstances, levied penalty for concealment of income in the three years under consideration at Rs. 6,59,039, Rs. 3,43,680 and Rs. 2,04,820 respectively by holding that the assessee's agreement for the addition of Rs. 19 lakhs in the assessment years 1979-80 to 1982-83 was attributable to--

(i) Unproved hundi borrowings raised for production of film and disallowable of interest thereon ;

(ii) Unproved donations introduced in the books of account of Prithvi Raj Kapoor Memorial Trust of which the assessee is a Settlor ;

(iii) Unaccounted professional receipts for the film 'Suhag' ; and

(iv) Inflation of expenses in production of film 'Kalyug' and '36 Chowranghee Lane'.

According to the ITO, the provisions of Explanation (1) to section 271(1)(c) of the Act were clearly applicable in the case. The assessee, he states, has credited in his books of account loans in the names of parties who are really not men of means, debited interest thereon and also has credited in the books of account of Prithvi Raj Kapoor Memorial Trust of which he is a Settlor, sums in the guise of donations from the parties, who in fact have no means to pay. Coupled with the offer for taxation and the request for capitalisation of the amounts in the books of account, according to him, clearly led to an irresistible conclusion that the assessee has not, in fact, declared his correct state of income while filing the returns of income. Relying upon the decision of the Madras High Court in the case of S. Paramasiva Mudaliar & Sons (P.) Ltd. v. CIT [1966] 60 ITR 283 (Mad.) and that of the Delhi High Court in the case of Durga Timber Works v. CIT [1971] 79 ITR 63 he held that where the assessee admits that the unproved credit should be treated as his concealed income and included in his total income, the department is not required to prove by independent evidence that the assessee has concealed his income. In the light of the above facts, he held that the main provisions of section 271(1)(c) and also Explanation 1 to section 271(1)(c) were clearly applicable in the case. The assessee's reliance on the decisions of the Supreme Court in CIT v. Anwar Ali [1970] 76 ITR 696, CIT v. Khoday Eswarsa & Sons [1972] 83 ITR 369 (SC) and in Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457 (SC) was held by the ITO to be of no help to the assessee in view of the introduction of Explanation 1 to section 271(1)(c) of the Act with effect from 1-4-1976.

5. In appeals the CIT(A) confirmed the penalties following the judgment of the Kerala High Court in CIT v. C.P. Antony [1986] 27 Taxman 50 (FB), stating that an assessee is bound to disclose his real income in the return filed under section 139 of the Act and if he fails to do so, the offence of concealment or furnishing incorrect particulars would be complete. He further states that it must also be appreciated that the law as it stood at the relevant time of filing the returns did not require the establishment of 'deliberate' concealment before imposing penalty. Most of the cases cited by the assessee, he states, related to the earlier period prior to the amendment of the penal section and the difference between the income as originally returned and that finally assessed clearly indicated the quantum of income which had been concealed by furnishing inaccurate particulars which inference, according to him, was established by the fact that the assessee not only agreed to the additions but he has sought to capitalise the amounts which were agreed upon. As far as the assessee's co-operation with the department was concerned, he stated, that there was no dispute, but it would be material only so far as the quantum of penalty was concerned. As regards the issue of department not making any enquiries regarding genuineness of loans etc., he felt that this cannot hide the aspect of furnishing inaccurate particulars. In an agreed assessment, the assessee is saved harassment while the department is saved the time and energy of having to carry out detailed enquiries. He found that the ITO has already taken due note of this factor and imposed only the minimum penalty. He also gave emphasis to the fact that the assessee did not contest the additions that were made when appeals against the quantum assessment were made having admitted an income higher than what was returned, and after opting to capitalise such income, he opined that the appellant cannot say that there has been no concealment or no furnishing of inaccurate particulars thereof. In the result, the CIT(A) upheld the orders of penalty.

6. The learned counsel for the assessee raised the following contentions :

(i) that surrender of income does not invite penalty. For this proposition, he relied upon the decisions in the case of CIT v. P.M.P. Soundara Pandian & Bros. [1983] 140 ITR 385 (Mad.), CIT v. Reliable Trading Agency [1982] 138 ITR 505 (Cal.), the decision in Addl. CIT v. Solar Chemicals (P.) Ltd. [1984] 150 ITR 410 (All.), CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78 (SC) ; Sir Shadilal Sugar & General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) ; CIT v. Sen Mukherjee & Co. [1986] 159 ITR 793 (Cal.), CIT v. Haji Gaffar Haji Dada Chini [1988] 169 ITR 33 (Bom.) and the orders of the Tribunal in Kishan Lal v. ITO [1990] 34 ITD 152 (Delhi) and in the case of Sudha A. Chowgule v. ITO [1990] [IT Appeal No. 3657/(Bom.) of 1987, dated 24-4-1990].

(ii) that the assessment orders were accepted and appeals withdrawn in the hope that the setttlement put forward would be accepted. The settlement was to buy peace and to avoid harassment. There is nothing on the record to prove that the loans appearing in the books of the assessee were not genuine. In the circumstances, it was submitted that it was not a fit case for levying penalty. For this proposition, reliance was placed upon the decision of the Supreme Court in the case of CIT v. Orissa Corpn. (P) Ltd. ; that of the Calcutta High Court in the case of Sen Mukherjee & Co. ; that of the Patna High Court in Addl. CIT v. Hanuman Agarwal [1985] 151 ITR 150 and the Full Bench decision of the Andhra Pradesh High Court in the case of CIT v. H. Abdul Bakshi & Bros. [1986] 160 ITR 94.

(iii) That if the settlement was not accepted, the reliance on what the assessee had stated in the settlement petition could not be used by the department for levying penalty. For this proposition, reliance was placed upon the decision of the Calcutta High Court in the case of CIT v. National Alloy & Metal Works (P) Ltd. [1989] 176 ITR 299 (Cal.) ; that of the Jammu & Kashmir High Court in Fairdeal Motors v. CIT [1979] 117 ITR 137 ; that of the AP High Court in H. Abdul Bakshi & Bros.' case besides the judgment of the Allahabad High Court in CIT v. Devi Dayal Aluminium Industries (P) Ltd. [1988] 171 ITR 683 ; and

(iv) that capitalisation of the surrendered income is an extraneous consideration for the purposes of determining concealment. For this proposition, reliance was placed on the judgment of the Calcutta High Court in the case of Bhagwanji Bhawanbhai & Co. v. CIT [1983] 141 ITR 640.

7. The learned Departmental Representative on the other hand, submitted that the penalty is levied not for the amount offered by the assessee in the petition but on cash credits and other additions made in the assessments. The offer of Rs. 19 lakhs income was to cover the bogus hundi loans and other disallowable expenditure. As the assessments were not challenged by the assessee, it could be deemed to be an admission of the income and concealment, in view of the decision of the Calcutta High Court in the case of CIT v. P.B. Shah & Co. (P) Ltd. [1978] 113 ITR 587. He also submitted that the petition under section 273A of the Act was rejected on 4-3-1986 and, therefore, it could be assumed that the disclosure was not voluntary. He also relied upon the judgment of the Bombay High Court in Western Automobiles (India) v. CIT [1978] 112 ITR 1048 ; that of the Supreme Court in G.C. Agarwal v. CIT [1990] 186 ITR 571 (SC) ; that of the Madhya Pradesh High Court in Nav Nirman Co. v. CIT [1984] 148 ITR 703 ; that of Allahabad High Court in Banaras Chemical Factory v. CIT [1977] 108 ITR 96 besides the Full Bench decision of the Gauhati High Court in K.C. Trunk & Bucket Factory v. CIT [1975] 99 ITR 67, wherein it has been held that it is for the assessee to prove that there was no concealment. According to him, Explanation 1 was clearly applicable in this case as what the assessee had stated before the ITO was not substantiated nor the claim of the assessee was bona fide. Lastly, he submitted that the capitalisation of the amounts by the assessee and the seizure of the cash found at the time of the raid and the payment of Rs. 1,35,000 to Prithvi Raj Kapoor Memorial Trust were clear indications of the assessee's concealment as, otherwise, the money would not have been available for either capitalisation or for making donations or in cash at the time of the raid.

8. We have heard the parties and considered their rival submissions. The charge of concealment, as per the main provisions of section 271(1)(c), is where the assessing officer, or the Deputy Commissioner(Appeals) or the Commissioner(Appeals), as the case may be, is satisfied that any person has concealed the particulars of his income, or furnished inaccurate particulars of such income. These provisions are in pari materia to the provisions contained in the 1922 Act except the word " deliberately " appearing before the words " furnished inaccurate particulars of such income " in the 1961 Act, deleted with effect from 1964. Under the old Act, penalty on the ground of concealment could be levied only if there was conscious and deliberate concealment on the part of the assessee as has been held by the Supreme Court in the cases of CIT v. M.A. Mohammed Hanif [1972] 83 ITR 215, CIT v. Khoday Eswarsa & Sons [1972] 83 ITR 369 and Sir Shadilal Sugar & General Mills Ltd. The burden was on the revenue to prove the concealment. The mere fact that the assessee had agreed to the inclusion of cash credits or other amounts in the total income on account of his inability to prove the source or to avoid protracted litigation with department would not be sufficient to levy penalty. The decisions of the Supreme Court in the case of CIT v. Ashoka Marketing Ltd. [1976] 103 ITR 543 and Sir Shadilal Sugar & General Mills Ltd. are authorities for this proposition. Despite the deletion of the word " deliberately " in 1964, this was the position with regard to agreed assessment as held by their Lordships of the Gujarat High Court in the case of CIT v. Vinay Chand Harilal [1979] 120 ITR 752. The burden still remains on the revenue to prove the concealment but for the Explanation inserted with effect from 1-4-1964 providing that where the total income returned by the assessee was less than 80 per cent of the total income assessed and unless the assessee proves that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part, the assessee is deemed to have furnished inaccurate particulars of his income. But this Explanation was also held to be a rebuttable presumption and if the assessee offered a reasonable explanation acceptable to the revenue authorities or the Tribunal, he could not be charged with penalty. Therefore, insofar as the main provisions for charging penalty under section 271(1)(c) without the aid of the Explanation are concerned, an assessee could not be charged with penalty unless the circumstances lead to a reasonable and a positive inference that the assessee's explanation was false. The onus to prove the concealment under the main provisions till remains upon the revenue. This is barring those cases where the Explanation applies that is where the income returned is less than 80 per cent of the total income assessed, in which case the onus was shifted to the assessee. In other words, the penalty for the 'deliberate act' of the assessee was shifted to the 'gross or wilful neglect' of the assessee.

9. In 1976, the presumptive Explanation was substituted by inserting Explanation (1), providing that " where in respect of any facts material to the computation of the total income of any person under this Ac--

(A) Such person fails to offer an explanation or offers an explanation which is found by the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner(Appeals) to be false, or

(B) Such person offers an explanation which he is not able to substantiate, then, the amount added or disallowed in computing the total income of such person as a result thereof shall for the purpose of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed. "

By the proviso, it is 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. " As held by the Tribunal in the case of Kumar Metal Industries (36 ITD 261), the entire emphasis in the Explanation is on the disclosure of certain facts. If all the facts were disclosed by an assessee before the income-tax authorities, no penalty can be levied, merely because its claim was not acceptable to the revenue. The facts contemplated in the Explanation are those which are material to the computation of the income of an assessee. To penalise for concealment, there must be a failure on the part of the assessee to offer an explanation in respect of such a fact. The failure contemplated is that was in the course of assessment proceedings and while making the assessment. The additions or disallowances which are deemed as income for which particulars are concealed must be as a result of the assessee's failure to offer an explanation and penalty proceedings being quasi criminal in nature, an assessee would be entitled to urge or point out the circumstances of his failure to explain at the assessment stage and could be exonerated from penalty on his satisfactory explanation thereof in penalty proceedings. The second deeming is when an explanation was given by an assessee but the same was found to be false, that is a positive proof of concealment and involving an element of deliberateness. The fact must not remain only 'unproved' but 'disproved' by the income-tax authorities for levying penalty. The last limb of deemed concealment in the Explanation is that where the assessee offers an explanation but he is not able to substantiate the same. This part of deeming is with two riders - (i) explanation was bona fide and (ii) all the facts material to the computation have been furnished by the assessee.

10. The words " added or disallowed in computing the total income " denotes an action of the income-tax authorities. If in a case the amount has not been added or disallowed in computing the total income of the assessee as a result of some action of the income-tax authorities but on other grounds, namely, because of the assessee's offering the addition or disallowance, the deeming provision, in our opinion would not be applicable. At the same time, the offer of the assessee should not, however, be after or consequent to the detection of concealment or furnishing of inaccurate particulars by the assessee as, in such circumstances, one could not say that the amount was not added or disallowed by the ITO in computing the total income of the assessee. Furthermore, the words " amount added or disallowed in computing the total income of such person as a result thereof " suggest that the addition or disallowance must be as a result of either (i) absence of an explanation, or (ii) the false explanation, or (iii) an unsubstantiated explanation by the assessee. This also suggests that the assessee was called upon by somebody which could be either the assessing officer or the Deputy Commissioner(Appeals), or the Commissioner(Appeals) as the case may be, as provided in section 271(1) to explain something and as a result of his no explanation or false explanation or unsubstantiated explanation, the amount was added or disallowed in computing his total income. In case where the assessee himself comes forward voluntarily and offers some income without there being any detection or the likelihood thereof, then there could be no concealment under Explanation (1) to section 271(1)(c).

11. Let us examine the present case with reference to what has been stated above. An addition of Rs. 8,05,000 was made on account of unverifiable loans with proportionate disallowance of interest thereon amounting to Rs. 2,48,519 in the assessment order dated 25-9-1982 for the assessment year 1979-80. This assessment was set aside by the CIT(A) on 9-2-1984. Thereafter nothing was brought on record to justify the conclusion that these loans were not genuine. On the contrary, the assessee had brought on record the confirmation letters along with the PA Numbers/GIR Numbers of the creditors. This addition neither falls in the main provision of section 271(1)(c) nor hit by the provisions of Explanation 1. The assessee had given his explanation and disclosed all the material facts relating to the computation of his income. The explanation given by the assessee, though was not substantiated because the assessee had surrendered the amounts, but was bona fide. The surrender was to buy peace and to amicably settle the income-tax matters of the assessee. The second amount in respect of which penalty is levied in the assessment year 1979-80 is the addition of Rs. 1,35,000 being the amount credited by the assessee in Prithvi Raj Kapoor Memorial Trust. This amount has been offered by the assessee himself. There was no enquiry nor any process by the revenue on this point. It was for the first time offered by the assessee in the petition dated 1-2-1983. This amount, therefore, could not be said to have been added or disallowed by the ITO and, accordingly, no penalty with respect thereto can be levied.

12. There has been some allegation of inflation of expenses in connection with the production of the film 'Junoon' but since no separate addition has been made on this account and in any case mere rejection of assessee's claim would not be sufficient to levy penalty with respect to such disallowance. We, therefore, delete the penalty levied in the assessment year 1979-80.

13. As regards assessment year 1980-81, the first item for which penalty is levied, is the interest on hundi loans amounting to Rs. 2,12,000. For the reasons stated while discussing the appeal for the assessment year 1979-80, we hold that no penalty could be levied with respect to this item. The second item for which penalty has been levied for this year is the sum of Rs. 3 lakhs being the fees received by the assessee for acting in the film 'Suhag'. The assessee had actually received a sum of Rs. 50,000 which was disclosed in his books of account and consequently offered to tax in the return. The assessee is following cash system of accounting. There is no allegation by the revenue that the amount was actually received by the assessee. This amount has been assessed in the hands of the assessee in pursuance of his agreeing for the assessment on accrual basis. This is a matter of honest difference of opinion for which neither the main provisions of section 271(1)(c) nor Explanation would apply. The assessee's explanation that he was offering the income on cash basis could not be brushed aside. Merely because the assessee had agreed to offer the said amount on accrual basis would not be a ground for the imposition of penalty either under the main provision or under the Explanation. Furthermore, the producer of the film, Sri Suresh Desai, could not pay the full contracted amount in view of his financial difficulties, not only to the assessee, but to other co-stars, namely, Amitab Bachhan, Rekha Ganeshan, and Parveen Babi. The matter of Rekha Ganeshan came up to the Tribunal level and the addition made in her case stood deleted. In the circumstances, we delete the penalty levied for the assessment year 1980-81 as well.

14. In the assessment year 1982-83, penalty is imposed with respect to the sum of Rs. 3 lakhs offered by the assessee with respect of the film 'Suhag' and for the reasons stated by us while discussing the appeal for the assessment year 1980-81, we hold that penalty is not justified in respect of this item. The second item in respect of which penalty is levied is the addition of Rs. 45,000. The penalty is levied on the ground that the amount represented unaccounted professional receipts of the assessee. In the assessment order, we do not find any addition on this account. An addition of an equivalent amount has, however, been made in the assessment towards the expenses debited to the cost of the picture '36 Chowringhee Lane' in absence of supporting vouchers and the expenditure being in the nature of entertainment. The disallowance is on estimate basis and was as a result of some statutory provisions. However, there is no allegation that the expenses have not been incurred at all by the assessee. In respect of this item also, we are of the opinion that neither the main provisions of section 271(1)(c), nor the Explanation 1 thereto would apply. The disallowance is of a routine nature and not arising out of any concealment or for furnishing of any inaccurate particulars thereof by the assessee. In the circumstances, we delete the penalty levied for this year as well.

15. A strong reliance has been placed by the revenue on the capitalisation of a sum of Rs. 15 lakhs by the assessee as on 1-4-1983. As the offer made by the assessee as such was not acted upon or proceeded with, no cognisance of the capitalisation thereunder could be taken note of by the revenue for concluding concealment. The entry of Rs. 15 lakhs made on 1-4-1983 has to be treated only as a paper entry and to be ignored for all purposes and intent. The seizure of cash of Rs. 1,48,524 was on 22-10-1982 which fell in assessment year 1983-84. The Calcutta High Court in the case of Bhagwanji Bhawanbhai & Co. held that even though the assessee offered the amount to be assessed after spreading over the amount for a period of years, there was no statement in the disclosure/offer to the effect that the amount in question represented its income or receipt of a revenue character of the year in question. The Court in that case held that the credit of an amount of Rs. 2,45,000 under " Disclosure Capital Account " in place of various loan amounts in its books of account at a later year did not amount to an admission of concealed income on the part of the assessee as envisaged under the provisions of section 271(1)(c) of the Act. Their Lordships referred to the judgment of the Supreme Court in the case of Anantharam Veerasinghaiah & Co. wherein it was held that when an 'intangible' addition was made to the book profits during an assessment proceeding, it was as much a part of the real income as that disclosed by his account books; that it had the same concrete existence ; that it could be available to the assessee as the book profits could be ; that the secret profits or undisclosed income of an assessee earned in an earlier assessment year might constitute a fund even though concealed from which the assessee might draw subsequently for meeting expenditure or introducing amounts in his account books, but it would be quite another thing to say that any part of that fund must necessarily be regarded as the source of unexplained expenditure incurred or of cash credits recorded during a subsequent assessment year. The Court further observed that it was a matter for consideration in each case as to whether the unexplained cash deficits and the cash credits could be reasonably attributed to a pre-existing fund of concealed profits or they were reasonably explained by reference to concealed income earned in that very year. It was further explained that in each case, the true nature of the cash deficit and the cash credit must be ascertained from an overall consideration of the particular facts and circumstances of the case. The Court further observed that evidence might exist to show that reliance could be placed completely on the availability of a previously earned undisclosed income and a number of circumstances of vital significance might point to the conclusion that the cash deficit or cash credit could not reasonably be related to the amount covered by the intangible addition but must be regarded as pointing to the receipt of undisclosed income earned during the assessment year under consideration. It was also observed that it would be open to the revenue to rely on all the circumstances pointing to that conclusion. They must, it pointed out, be such as could lead to the firm conclusion that the assessee had concealed the particulars of his income or had deliberately, furnished inaccurate particulars. The burden, it was held, remained on the revenue to prove the existence of material leading to that conclusion. In the circumstances, the Court held that there must be evidence, either in the admission of the assessee in the disclosure petition or aliunde adduced by the revenue to show that the amount represented receipt of revenue character in the relevant assessment year and it would not be sufficient to rely on the finding that a certain amount had been added as the income of the assessee of which the assessee could not explain the source nor would it be sufficient for penalty proceeding to rely on the statement of the assessee that the assessee had offered the amount for assessment in a particular year. The Court then held that the facts and circumstances and the terms and conditions under which the assessee had offered the amount for taxation must be looked into. In the cases on hand, in the petition of offer, the assessee had repeatedly 'stated' that the loans were genuine and the confirmation letters along with the P.A. Numbers/GIR Numbers were filed. The offer was made by the assessee only to buy peace and to avoid protracted litigation with the department.

16. Of course, the case before Their Lordships of the Calcutta High Court was dealing with the assessment year 1957-58, wherein the provisions of 1922 Act were applicable, but that would not make any difference insofar as the main provisions of section 271(1)(c) are concerned. Respectfully following the aforesaid judgment of the Calcutta High Court, we hold that the capitalisation by the assessee of the amount as on 1-4-1983 would have no relevance in determining as to whether the assessee had concealed the particulars of income, or furnished inaccurate particulars thereof. It would amount to an extraneous consideration. Besides, it would be a matter for consideration in the year when the amount was introduced, or utilised by the assessee and so far as the years under consideration are concerned, it would have no effect as aforesaid, and it would not be a relevant consideration in determining the conceal ment or of furnishing of inaccurate particulars thereof by him.

17. In the result, the penalties levied and sustained by the revenue authorities for the years under consideration under section 271(1)(c) of the Act are cancelled and the appeals are allowed

 

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