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Commissioner of Income-tax Vs. Banarsi Shah Charan Singh - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberMiscellaneous Income-tax Reference No. 88 of 1966
Judge
Reported in[1972]86ITR494(All)
ActsIncome Tax Act, 1922 - Sections 28(1)
AppellantCommissioner of Income-tax
RespondentBanarsi Shah Charan Singh
Appellant AdvocateB.L. Gupta and ;R.R. Misra, Advs.
Respondent AdvocateP.N. Pachauri, Adv.
Excerpt:
- .....act, 1922, was satisfactorily established in either of the two years under reference?' 2. the assessment years under consideration are the years 1955-56 and 1957-58, the relevant previous years being the years ending march 31, 1955, and march 31, 1957, respectively.3. the assessee is a hindu undivided family carrying on business under the name and style of banarsi shah charan singh of roorkee.4. during the assessment proceedings for the assessment year 1955-56 the income-tax officer noticed a number of cash credits totalling rs. 19,600 in the accounts of different persons. the income-tax officer considered the explanation of those persons as to the source of the deposits and did not believe them. he treated the total amount of cash credits as the income of the assessee from.....
Judgment:

Pathak, J.

1. As many as four questions have been referred by the Income-tax Appellate Tribunal for the opinion of this court. They are as follows:

'(1) Whether the provision for imposition of a penalty under Clause (c) of Sub-section (1) of Section 28 of the Income-tax Act, 1922, is of a penal nature?

(2) Whether the onus of establishing the conditions requisite for the imposition of a penalty under Section 28(1)(c) of the Act lies upon the revenue ?

(3) Whether the conditions requisite for the imposition of a penalty under Section 28(1)(c) of the Act should be established beyond reasonable doubt ?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal rightly held that none of the two conditions requisite for theimposition of a penalty under Section 28(1)(c) of the Income-tax Act, 1922, was satisfactorily established in either of the two years under reference?'

2. The assessment years under consideration are the years 1955-56 and 1957-58, the relevant previous years being the years ending March 31, 1955, and March 31, 1957, respectively.

3. The assessee is a Hindu undivided family carrying on business under the name and style of Banarsi Shah Charan Singh of Roorkee.

4. During the assessment proceedings for the assessment year 1955-56 the Income-tax Officer noticed a number of cash credits totalling Rs. 19,600 in the accounts of different persons. The Income-tax Officer considered the explanation of those persons as to the source of the deposits and did not believe them. He treated the total amount of cash credits as the income of the assessee from undisclosed sources and included it in the total income of the assessee.

5. In assessment proceedings for the assessment year 1957-58, the Income-tax Officer noticed that the assessee had acquired a plot of land for Rs. 2,300 during the relevant previous year, but its price had not been paid from the funds in the account books of the assessee. The assessee explained that the price was paid from savings and previous withdrawals kept at home, which had not been entered in the account books. The explanation was not accepted. The Income-tax Officer also noticed a credit entry of Rs. 1,350 in the account of one of the coparceners in the assessee's books. The explanation in respect of that amount was also rejected by him. Accordingly the two amounts were included in the assessee's total income for the assessment year 1955-56 as income from undisclosed sources. The assessee did not appeal against the assessment order.

6. Thereafter the Income-tax Officer initiated proceedings under Section 28(1) of the Indian Income-tax Act, 1922, in respect of each of the two assessment years mentioned above. The assessee attempted the same explanation as had been adduced by it during the assessment proceedings and with the same result. The Income-tax Officer levied a penalty of Rs. 4,500 for the year 1955-56 and a penalty of Rs. 1,200 for the assessment year 1957-58. The assessee appealed against the penalty orders. The Appellate Assistant Commissioner of Income-tax reduced the amount of penalty in the two cases. Thereafter, the assessee appealed to the Income-tax Appellate Tribunal. The Tribunal, holding that the burden of proof lay upon the department to establish that the assessee had wilfully or deliberately concealed its income in relation to the two assessment years and that the burden had not been discharged by the department, allowed the appeal and quashed the penalty orders.

7. We have gone through the order of the Tribunal. The Tribunal has found that the department has not succeeded in positively establishing thatthe assessee had concealed the particulars of its income or deliberately furnished inaccurate particulars thereof. It has observed that the assessments proceeded on the basis of estimates and inferences and that the existence of the income had not been established beyond reasonable doubt. Upon this ground it has found that the provisions of Section 28(1)(c) are not attracted. A long catena of cases had been referred to and discussed by the Tribunal in its order. We do not consider it necessary to examine these cases because, in our opinion, the matter stands concluded by a recent decision of the Supreme Court in Commissioner of Income-tax v. Anwar Ali, [1970] 76 I.T.R. 696 (S.C). The Supreme Court has laid down that mere rejection of an explanation given by an assessee in respect of cash credit entries found in its account books will not justify the application of Section 28(1)(c) and the consequent imposition of penalty. The Supreme Court has observed that before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed entries represent income and that the assessee has consciously concealed the particulars of his income or has deliberately furnished inaccurate particulars. In that case, having regard to the circumstances, the Supreme Court held that, in the absence of cogent material evidence from which it could be inferred that the respondent had concealed the particulars of his income or had deliberately furnished inaccurate particulars and that the disputed amount was a revenue receipt, the penalty could not be imposed. Following the law laid down by the Supreme Court in this case we are of opinion that the questions should be answered as follows :

Question No. 1 in the affirmative.

Question No. 2 in the affirmative.

Question No. 3 in the affirmative.

Question No. 4 in the affirmative.

8. The assessee is entitled to its costs, which we assess at Rs. 200. Counsel's fee is also assessed at the same figure.


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