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imperial Box and Carton Makers Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Delhi
Decided On
Judge
Reported in(1985)11ITD551(Delhi)
Appellantimperial Box and Carton Makers
Respondentincome-tax Officer
Excerpt:
1. this is an appeal pertaining to the assessment year 1975-76. the assessee, a registered firm, manufactures and sells boxes and cartons.the previous year for the assessment year 1975-76 ended on 31-3-1975.for the year under consideration, the assessee filed a return of income on 11-8-1975, declaring an income of rs. 49,510. during the course of the assessment proceedings, the ito noticed the following cash credits aggregating to rs. 95,000 in the account of shri sukhbir singh :date of receipt of loan amount date of return of loan rs.2-5-1974 25.,000 7-7-19756-5-1974 25,000 8-7-19755-7-1974 15,000 10-5-197511-3-1975 15,000 9-6-197522-3-1975 15,000 21-4-1975 2. the ito required the assessee to explain the nature and source of these credits. he also recorded the statement of sukhbir.....
Judgment:
1. This is an appeal pertaining to the assessment year 1975-76. The assessee, a registered firm, manufactures and sells boxes and cartons.

The previous year for the assessment year 1975-76 ended on 31-3-1975.

For the year under consideration, the assessee filed a return of income on 11-8-1975, declaring an income of Rs. 49,510. During the course of the assessment proceedings, the ITO noticed the following cash credits aggregating to Rs. 95,000 in the account of Shri Sukhbir Singh :Date of receipt of loan Amount Date of return of loan Rs.2-5-1974 25.,000 7-7-19756-5-1974 25,000 8-7-19755-7-1974 15,000 10-5-197511-3-1975 15,000 9-6-197522-3-1975 15,000 21-4-1975 2. The ITO required the assessee to explain the nature and source of these credits. He also recorded the statement of Sukhbir Singh. The assessee produced evidence in support of the genuineness of the loans.

The ITO in detail discussed the evidence produced by the assessee. The ITO, after considering the entire evidence in detail, held that the theory of loan advanced by Sukhbir Singh was a cooked up story and in reality Sukhbir Singh never advanced any loan. He also gave a clear finding that the theory of payment of interest to the creditor was also not genuine. Consequently, the ITO added a sum of Rs. 95,000 to income of the assessee as from undisclosed sources. Consequently, he completed his assessment on a total amount of Rs. 1,00,617. He also initiated penalty proceedings under Section 271(l)(c) of the Income-tax Act, 1961 ('the Act').

3. In penalty proceedings, inter alia, it was submitted that the loans in dispute were genuine. In view of the evidence on record, it was contended that there were preponderance of probabilities that really the money was borrowed from Sukhbir Singh. It was also submitted that even after the insertion of the Explanation under Section 271(l)(c), it was for the department to prove that the sum of Rs. 95,000 was income of the assessee in the year of account and the assessee failed to disclose the same. The ITO considered the explanation of the assessee in detail. Inter alia, the learned ITO held as under : That the assessee was given sufficient opportunity to adduce evidence in support of the genuineness of these amounts. The assessee had failed to produce the person, i.e., Ch. Sukhbir Singh, in whose name the amounts were introduced. Ch. Sukhbir Singh was summoned and examined on oath and he flatly denied having given any loan to the assessee. He also denied that the signatures on the reverse of alleged pronotes were his. Even a visual check of the signatures appended on the reverse of the pronotes in token of payment of loan amounts with the signatures of Ch. Sukhbir Singh on the statements recorded shows that there is no resemblance between the signatures at the reverse of pronotes and his actual signatures.

Even on cross-examination by the counsel of the assessee, Ch.

Sukhbir Singh denied having ever advanced any loan to the assessee.

The assessee produced one Chatter Singh, alleged to have been the broker for this transaction. On his examination, he stated that he had put Shri Amrit Prakash, partner, in contact with Shri Sukhbir Singh, yet neither were the loan amounts passed in his presence nor repaid in his presence nor were any documents signed in his presence nor did he know how much loan was required by the assessee.

Further, Ch. Sukhbir Singh, in a confessional statement before the ITO assessing him, had stated that he was doing hawala business and many persons were given accommodation by him. Shri Sukhbir Singh, in fact, was a man of very meagre means and was not in a position to advance such a huge amount as a loan. This is proved by the fact that a number of Court decrees were passed against him but the same could not be executed as he has no real asset. The counsel for the assessee stated that interest on some occasions were paid by cheque.

On going through the bank pass book of Shri Sukhbir Singh, these amounts paid by cheques were credited in his bank account but that is clearly a case of charges paid for name-lending. Keeping the totality of evidence in view, it is established beyond a shadow of doubt that the credits shown were not genuine and the assessee has failed to discharge the onus. Apart from this, the conduct of the assessee before and during the course of assessment proceedings has been of tenaciously holding on to the made-up story and to persistently perpetuate the falsity of the whole transaction. The assessee is, therefore, clearly in default and penalty is exigible in his case. The assessee had gone in appeal to the Commissioner (Appeals) and the appeal on this point was dismissed.

4. The learned ITO after considering all the contentions was of the view that penalty was leviable under Section 271(l)(c). Thus, he held that assessee concealed income of Rs. 95,000 plus interest of Rs. 5,617. Thus, he imposed a penalty of Rs. 1,00,617 under Section 271(l)(c).

5. Being aggrieved with the order of the ITO, the assessee took up the matter in appeal. Inter alia, it was submitted that the interest payments were made by cross cheques and that the above interest payment stood recorded in the bank account of Shri Sukhbir Singh. It was also contended that the books of account were accepted by the department except for the above cash credits for which the addition was made. The learned counsel also submitted that it was not established by the department that the assessee knowingly concealed the particulars of its income. In the same connection it was argued that in the present case, the department failed to discharge the initial onus which lay on it.

According to the learned counsel, the assessee failed to prove the genuineness of the loans as such additions were made under Section 68 of the Act.

6. The learned Commissioner (Appeals) was not satisfied with the contention of the appellant. According to him, in the present case, returned income was less than 80 per cent of the assessed income and as such Section 271(l)(c) is attracted. According to the learned Commissioner (Appeals), in the present case, the assessee failed to discharge the initial onus resting upon it. The learned Commissioner (Appeals) was of the view that the assessee made bogus entries in the books of account and introduced bogus cash credits. The learned Commissioner (Appeals), consequently, held that the sum of Rs. 95,000 was never advanced by Shri Sukhbir Singh. The learned Commissioner (Appeals), consequently, sustained the order of the ITO.7. Before the Tribunal, 'on behalf of the appellant, it was contended that the learned Commissioner (Appeals) was not justified in sustaining the order of penalty. The other contention of the learned counsel for the appellant was that the ITO imposed penalty under Section 271(l)(c) on the basis of Explanation 1(A) added to Section 271(l)(c) of the Act, with effect from 1-4-1976. According to the learned counsel, the said Explanation is only applicable from the assessment year 1976-77 and not from the assessment year under consideration. So, the very basis on which the penalty was imposed by the ITO, was illegal. Thus, it was contended that order of imposing penalty under Section 271(l)(c) by the ITO was legally not correct. The other contention of the learned counsel for the appellant was that in the present case, in penalty proceedings, it was not established by the department that the sum of Rs. 1,00,617 was the income of the assessee in the year of account and the assessee consciously concealed the particulars of its income. Other submission of the learned counsel for the assessee was that in spite of Explanation to Section 271(l)(c), it was for the department to establish that the disputed amount was income of the assessee in the year of account and the assessee concealed the same. In the present case, no such material was brought on record. In this connection it was contended that the decision in the case of Addl. CIT v. Karnail Singh V. Kaleran [1974] 94 ITR 505 (Punj. & Har.) goes to show that it is for the department to prove the ingredients of Section 271(1)(c). The learned counsel also contended that in the present case on the basis of the material on record, the initial burden which lay upon the assessee was discharged. As such, it was contended that there was no fraud or gross or willful neglect on behalf of the assessee for not returning the assessed income. According to the learned counsel, there was preponderance of probabilities in favour of holding that there was no concealment of income.

8. On behalf of the revenue, it was contended that in the present case the assessee never took the stand before the learned Commissioner (Appeals), that the ITO was legally not correct in invoking Explanation 1(A) to Section 271(l)(c), which came into force from the assessment year 1976-77. Even if it may be accepted that any illegality was committed by the ITO in invoking Explanation 1(A) to Section 271, it was only a clerical mistake on his part because in substanc e, he applied provisions of Section 271(l)(c). The learned departmental representative contended that before the learned Commissioner (Appeals) no such arguments were advanced by the appellant. Moreover, the learned Commissioner (Appeals) after hearing the appellant and considering the evidence on record clearly held that the present case was hit by the Explanation to Section 271(l)(c), which came into force with effect from 1-4-1964. The learned Commissioner (Appeals), after hearing the assessee, held that in the present case the assessee failed to prove that there was no fraud or gross or willful neglect on the part of the assessee for not returning the assessed income. The learned departmental representative also submitted that the appellate authority was always competent to do what the ITO failed to do. If the ITO wrongly mentioned Explanation 1(A) to Section 271, it was not fatal in the present case. The other contention of the revenue was that in the present case, the Tribunal while deciding the quantum matter clearly held that the loans in question were bogus. It was also found as a fact that Shri Sukhbir Singh never advanced loan to the assessee. The learned departmental representative further contended that the present case is not a case where the assessee failed to prove its case. As a matter of fact, this case is based not merely upon the falsity of the explanation given by the assessee but the Tribunal, after appreciating all the facts, gave clear finding of fact that the loans were bogus and Shri Sukhbir Singh never advanced the loan. It was also pointed out that it was for the assessee to show that there was no fraud or gross or wilful neglect on its part in not returning its assessed income. The assessee failed to discharge this burden. Thus, the learned Commissioner (Appeals) was perfectly correct in holding that penalty was leviable in the present case under Section 271(l)(c). The learned departmental representative also contended that the decision in the case of Karnail Singh V. Kaleran (supra) is not the correct law.

9. We have considered rival submissions. At first we may point out that the ITO levied penalty under Section 271(l)(c). From the assessment order, it is also clear that he initiated penalty proceedings under Section 271(l)(c). It means that the ITO initiated penalty proceedings under Section 271(l)(c) for concealment of income and furnishing of inaccurate particulars of his income. While applying Explanation to Section 271(l)(c), he wrongly stated that Explanation 1(A) to Section 271 (l)(c) was attracted. As a matter of fact, from the order of the ITO imposing penalty, it was clear that his approach was correct but he mentioned wrong Explanation 1(A) to Section 271(l)(c). Simply because section was wrongly mentioned, the order of penalty passed by the ITO under Section 271(l)(c) cannot be said to be illegal. Penalty was imposed under Section 271(l)(c). The ITO, while imposing penalty, clearly held that apart from the conduct of the assessee before and during the course of assessment proceedings, it was clear that the assessee has been tenaciously holding on to the made-up story and was persistently perpetuating the falsity of the whole transaction. He also held that the explanation given by the assessee was totally false.

Before the learned Commissioner (Appeals) the assessee never took the stand that the ITO wrongly applied Explanation 1(A) to Section 271(l)(c). Even from the grounds of appeal filed before the Commissioner (Appeals), it was not proved that the assessee took the stand that Explanation 1(A) to Section 271(l)(c) was applied. Even before the learned Commissioner (Appeals), it was never argued that the penalty order passed by the ITO under Section 271(l)(c) was legally not sustainable in law. We may also point out that Explanation to Section 271(l)(c) only provides rules of evidence. If there was any irregularity in stating the wrong Explanation it was only a irregularity and will not go to the root of the matter. It is also settled law by now that if the ITO failed to apply his mind to the provision or came to a wrong determination for or against the assessee in computation of the tax, the appellate authority can correct the error. Reference may be made to the ratio of the decision of CIT v.McMillan & Co. [1958] 33 ITR 182 (SC).

10. If all the aforesaid facts are taken into consideration, it would be clear that the basis on which penalty was imposed under Section 271(l)(c) was not illegal. Against the order of the ITO, the assessee filed appeal before the learned Commissioner (Appeals). Before the Commissioner (Appeals), the assessee was given adequate opportunity of being heard. The learned Commissioner (Appeals) after appreciating all the facts and contentions of the appellant came to the conclusion that the ITO was correctly justified in imposing penalty under Section 271(l)(c). The learned Commissioner (Appeals) also held that the assessee failed to discharge the initial onus which lay on it in view of Section 271(l)(c), which came into force from 1964. In the decision of Saeed Ahmad v. IAC [1971] 79 ITR 28 (All.), it was held that the Explanation provides nothing more than a rule of evidence relating to the raising of a rebut table presumption. In certain circumstances, it was not a rule which created or negatived any substantive right.

11. The decision in the case of Lakser Lal Ji (sic), relied on by the learned counsel for the assessee, is not applicable on the facts of the present case. In that case initiation of penalties under Section 271(l)(c) was on a particular ground, namely, concealment of income, but the penalty was imposed for furnishing inaccurate particulars of income. On those facts, the Hon'ble High Court held that basis for the imposition of penalty was bad in law.

12. Looking to the aforesaid facts, we are of the definite view that in the present case, the basis for imposing penalty under Section 271(l)(c) was not bad in law.

13. Other contention of the learned counsel for the appellant was that in the present case the assessee produced sufficient evidence during the course of assessment proceedings and if all that evidence is taken into consideration, it would be clear that there were preponderance of probabilities for holding that there was no fraud or gross or wilful neglect on the part of the assessee. According to the learned counsel, it was for the department to prove that the addition in question was really income of the assessee in the year of account. According to the learned counsel, the deeming provision in the present case should not be extended beyond its legitimate field. According to the learned counsel, in view of the decision in the case of Karnail Singh V.Kaleran (supra), it was for the department to show that the disputed addition was the income of the assessee in the year of account and the claim of the assessee was bogus. As a matter of fact, it was a case of not proving the cash credits. Simply because the assessee failed to prove the genuineness of the cash credits, the penalty cannot be levied in the present case. The learned counsel for the assessee relies on the ratio of the decisions in the cases of CIT v. Vadilal Lallubhai [1972] 86 ITR 2 (SC), CIT v. Asbestos & Allied Packing Co. [1983] 144 ITR 109 (Cal.), CIT v. Sardar Bhagat Singh [1983] 142 ITR 836 (Pat.), Addl.

CIT\. Prasadi Sao Rajendra Prasad [1984] 145 ITR. 504 (Pat.), CIT v.Chotanagpur Glass Works [1984] 145 ITR 225 (Pat), Bapulal Ramchandra v.CIT [1982] 137 ITR 23 (MP) and CIT v. Nipani Tobacco Stores [1984] 145 ITR 128 (Pat.). On behalf of the revenue, it was contended that the decision relied on by the learned counsel for the appellant are not applicable on the facts of the present case. The present case is really covered by the ratio of decision in the case of D.M. Manasvi v. CIT [1972] 86 ITR 557 (SC). The learned departmental representative contended that in that case the Tribunal has clearly given finding that the loans were bogus and the creditor never advanced the loans. Against that finding, the assessee filed application under Section 256(1) of the Act which was rejected. Even application under Section 252(2) of the Act was rejected by the Hon'ble High Court. The learned departmental representative contended that on the facts of the present case, it is proved that the cash credits were bogus. In penalty proceedings, the assessee did not produce fresh material. The Tribunal, while deciding quantum matter, after considering all the evidence produced by the assessee and after appreciating all the facts and the evidence, the Tribunal clearly gave finding that the creditor never advanced the loan. It was held that the disputed loans do not find place in the books of the account of the creditor. Moreover, in view of Explanation to Section 271(l)(c), the sum of Rs. 1,00,617 was the deemed income of the assessee in the year of account. Since the assessee failed to discharge the initial onus which lay upon it, the case of the assessee is fully covered under the deeming provision. The learned departmental representative further contended that whether the cash credits were genuine or not, were in the personal knowledge of the assessee. The Tribunal has already held that such loans were bogus. The learned departmental representative further contended that the decision in the case of Karnail Singh V. Kaleran (supra) was overruled by the Full Bench of the same High Court.

14. Before discussing the contentions of the parties in detail, we will like to point out that the Tribunal, while deciding quantum matter in para 6 of the order, clearly held that the creditor never advanced loans in question. It was also found by the Tribunal that the entries regarding the loans of Rs. 95,000 did not find place in the books of account of Shri Sukhbir Singh & Sons. It was also found that the books of account of Shri Sukhbir Singh & Sons did not even indicate the receipts of interest. The Tribunal, after appreciating the statement of Shri Sukhbir Singh and other material, clearly held that the loans were never advanced by the creditors and the interest was never received by them. The Tribunal, after appreciating the facts, also held that the pronotes were never executed by the creditors and the receipt of interest was also not under the signature of Shri Sukhbir Singh. The Tribunal clearly held that the ITO had brought on record enough evidence to show that Shri Sukhbir Singh did not advance loan of Rs. 95,000 as alleged. The Tribunal after appreciating the evidence on record, including the statement of Shri Sukhbir Singh, clearly held that the whole thing was not genuine. On the face of this finding of the Tribunal, it is difficult to say at this stage that it was a case of not proving the cash credit. As a matter of fact the present case is one in which, from the evidence on record, it is proved that the theory of advancing the loan to the assessee was bogus. The ITO, while deciding the penalty matter, also gave a positive finding, supported with material on record, that the whole theory of advancing the loan was cooked up story. We have also reproduced the relevant observations of the ITO given in the penalty order. We agree with the observations made by the ITO while passing the penalty order.

15. It is common ground that in the present case, returned income was less than 80 per cent of the finally assessed income. So, Explanation to Section 271 (l)(c) is clearly attracted. Once the said Explanation is applicable, it straightaway raises three legal presumptions, viz., (i) that the amount of the assessed income is the correct income and it is in fact the income of the assessee himself; (ii) that the failure of the assessee to return the correct assessed income was due to fraud ; or (iii) that the failure of the assessee to return the correct assessed income was due to gross or wilful neglect on his part.

16. The said presumptions raised by the Explanation are not conclusive presumptions and they are rebuttable. As a rule under the civil law, the initial burden of discharging the onus of rebuttal is on the assessee. However, once it does so, it would be out of the mischief of the Explanation until and unless the department is able to establish afresh that the assessee in fact had concealed particulars of income or furnished inadequate particulars thereof. The basic rule of evidence is that if the person, on whom the onus to prove lies, is unable to discharge the same, his case would fail. The burden of discharging the onus would again be like the one in ordinary civil proceedings, i.e., it can be so discharged by preponderance of probabilities. It would be permissible to an assessee under the penalty proceedings to show and prove that on the existing material itself, the presumption raised by the Explanation would stand rebutted. There is no dispute to the proposition that the penalty proceedings are separate and distinct from the assessment proceedings.

17. We may point out that in cases of concealment of income and tax evasion, the modus of concealment is obviously within the special knowledge of the assessee. Consequently, in cases of blatant evasion, the Legislature was compelled to take off the impossible burden of establishing facts which are obviously in the special knowledge of the assessee alone. The onus was, therefore, rightly placed on the shoulders of the assessee to say, that despite the amendment no change was brought about in the law, would be rendering the whole of the provisions redundant and would be violating the settled rule of construction that a meaning must be given to every word in a statute.

The intention of the Legislature in making the amendments to Section 271(l)(c) and inserting the Explanation thereof was to bring about the change in the existing law. Consequently, the ratio of decision in the case of CIT v. Anwar Ali [1970] 76 ITR 696 (SC) is no longer attracted for the construction of Section 271(l)(c) as amended. The ratio of decision in the case of Karnail Singh V. Kaleran (supra) no longer holds good. In the case of Vishwakarma Industries v. CIT [1982] 135 ITR 652 the Hon'ble Punjab and Haryana High Court (Full Bench) had clearly ruled that the said decision was not correctly decided. Now, on the facts of the present case, it has to be decided whether the assessee was able to discharge the initial burden which lay upon it or not. It is common ground that in penalty proceedings, no fresh material was produced by the assessee. So on the basis of the material on record, it has to be decided whether there were preponderance of probabilities in favour of holding that there was no fraud or gross or wilful neglect on the part of the assessee is not returning the assessed income. The assessee miserably failed to prove that there was no fraud or gross or wilful neglect in not returning the assessed income. We have gone through the copy of the statement of the creditor. He has clearly denied for having advanced the loan in question. He also clearly stated that he never executed the pronotes in question. He further stated that the payment of interest was never received by him. He also denied his signatures on the receipts of the interest. It is significant to note that whether the cash credits were genuine or not were in the personal knowledge of the assessee. The cash credits do find place in the books of account of the assessee. In quantum matter it was finally held that the creditor never advanced the loans. That finding still holds good.

Even from the statement of Shri Sukhbir Singh, it is proved that he never advanced the loan to the assessee. Shri Sukhbir Singh was maintaining account books. Even in his books of account the advancing of loan was not recorded. His books of account also did not show that he ever received any interest. The statement of creditor was recorded twice. The creditor consistently denied for having advanced the loan in question. We have gone through the entire statement of Shri Sukhbir Singh carefully.

We have also gone through the other material on record. If all the said evidence is appreciated in the light of preponderance of probabilities and hard facts of life, the only one conclusion that can be drawn, is that the whole theory of advancing the loan was bogus. The assessee made false entries in the books of account. Even the payment of interest was wrongly debited. The assessee was not able to show, in penalty proceedings, that the creditor was telling a lie, on the basis of material on record. In view of the matter, the assessee was not able to produce evidence or circumstances to show that the loans in question were genuine. Even the statement of broker was recorded. He clearly stated that in his presence the loan was not advanced. So all the connected persons clearly stated that the theory of advancing of the loan was not genuine. If the claim was genuine, at least the assessee could have filed his affidavit. On the other hand, it is proved that the whole theory is bogus. The ITO and the learned Commissioner (Appeals) gave good reasons in support of their findings.

18. Thus, there is no material on record to prove that the assessee was able to discharge the onus which lay upon it. Under the circumstances, the case of the assessee is hit under the mischief of Explanation under Section 271(l)(c). In our opinion, the Full Bench of the Hon'ble Punjab and Haryana High Court has discussed this issue in detail. Even in the case of C1T\. S.P. Bhatt [1974] 97 ITR 440, the Hon'ble Gujarat High Court held that a rebuttal /presumption that the assessed income is in fact the income of the assessee himself, is equally raised by the Explanation.

19. We may state here that in penalty proceedings, it was for the assessee to show and prove that on the existing material itself, the presumption raised by the Explanation stands rebutted. On the facts stated above, the assessee failed to discharge the initial onus. On the other hand from the aforesaid discussion, it is clear that the theory of advancing the loan by the creditor to the assessee was concocted one. It is proved that the creditor never advanced the loan to the assessee and the assessee never made payment of interest. It is also proved that the entries in the books of account recording the loan were bogus and false. So the present case is not a case of inference from mere aforesaid explanation given by the assessee, but a case wherein there are definite evidence and finding that a device has been created by the assessee for the purpose of concealing his income. So the present case comes within the ratio of the decision in the case of DM.Manasvi (supra).

20. Now we would discuss the decisions relied on by the learned counsel for the appellant. The first relevant decision is in the case of Vadilal Lallubhai (supra). In that case, the Supreme Court ruled that deeming provisions are only for a definite purpose. They are limited to the purpose for which they are created and should not be extended beyond their legitimate field. To this proposition there could be no dispute. Other decision relied on by the learned counsel for the assessee was Nipani Tobacco Stores' case (supra). In that case, the Tribunal after appreciating the facts, came to the conclusion that the initial burden which lay upon the assessee in view of Explanation to Section 271(l)(c) was discharged. So, the said decision was rendered on the facts of the case. The other decision, relied on by the learned counsel, was Asbestos & Allied Packing Co.'s case (supra). In that decision the Tribunal holds that the mere inability to explain the hundi's loan cannot amount to fraud or wilful neglect, attracting penalty and that no penalty could be levied merely because the assessee surrendered certain receipts for purposes of taxation. So, that decision was passed on the facts of that case. The decision in the case of Sardar Bhagat Singh (supra), relied on by the learned counsel for the appellant, is also on different facts. In that case there was no finding of wilful concealment or gross or wilful neglect by the assessee. So, this decision also does not help the assessee. The decision in the case of S.P. Bhatt (supra) also does not help the appellant. Even in that case it was held that the legal fiction enacted in the Explanation could be displayed only if there was no fraud or gross or wilful neglect on the part of the assessee. In that decision the Hon'ble High Court held that the Explanation to Section 271(l)(c) creates a legal fiction if the condition of its applicability is satisfied. The condition is an objective condition, namely, that the total income returned by the assessee should be less than 80 per cent of the total income assessed subject to a certain deduction, which is not material for our purpose. What the condition contemplated was merely a matter of arithmetical calculation. The income-tax authority was required to take up the total income returned by the assessee and the total income assessed by the revenue authorities and if the former is less than 80 per cent of the latter, the condition for applicability of the Explanation is satisfied. So, the said decision also does not help the assessee. The decision in the case of Bapulal Ramchandra (supra) also does not help the appellant. Even this decision goes to show that if the quantum of concealed income falls within the Explanation to Section 27l(l)(c) the burden which was on the department to prove the fact that there was conscious concealment on the part of the assessee, has now been placed on the assessee by the Explanation and the assessee is required to prove that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. Other decisions, relied on by the appellant, are also on different facts. Under these circumstances, it is not necessary to discuss them in detail.

21. Looking to the aforesaid facts and the entirety of circumstances and hard facts of life, we are of the view that in the present case, in view of Explanation to Section 271(l)(c), the assessee miserably failed to prove that there was no fraud or gross or wilful neglect on the part of the assessee for not returning the assessed income. So, in penalty proceedings the assessee failed to prove that on the existing material itself the presumption raised by the Explanation stands rebutted. We are also of the view that the present case is not the one where the explanation of the assessee was rejected or where the assessee failed to prove the genuineness of the cash credits, but in the present case there are definite evidence on record as discussed above to prove that the assessee made false entries in the books of account for the purpose of concealing the income. The whole theory of advancing the loan by the creditor is bogus. In substance the creditor never advanced the loan to the assessee and the assessee has been perpetuating a story which has no legs to stand. So the present case is really covered by the ratio of the decision of the case of DM. Manasvi (supra).

22. For the reasons discussed above, there is no substance in this appeal.

23. No other point was pressed before us. In the result, the appeal fails and the same is dismissed.


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