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Commissioner of Income-tax Vs. R.H.N. Choudhuri and Co. Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 209 of 1970
Judge
Reported in[1977]107ITR342(Cal)
ActsIncome Tax Act, 1961 - Section 271(1); ;Income Tax Act, 1922
AppellantCommissioner of Income-tax
RespondentR.H.N. Choudhuri and Co. Pvt. Ltd.
Appellant AdvocateA. Sengupta and ;Prabir Kumar Mazumdar, Advs.
Respondent AdvocateNone
Cases ReferredJain Brothers v. Union of India
Excerpt:
- .....commissioner for levy of penalty who issued a show-cause notice on the 16th february, 1966, and levied a penalty after considering the assessee's reply.4. the assessee preferred an appeal to the tribunal against the order of penalty. two points were taken in the appeal before the tribunal. firstly, it was urged that the assessment was made under section 23(3) of the indian income-tax act, 1922 and, as such, penalty could not be levied under section 271(1)(c) of the income-tax act, 1961.5. it was also urged that simply because some additions were confirmed in the assessment proceedings, no penalty could be levied. the fact of additions would not show that the assessee had concealed particulars of his income or had deliberately furnished inaccurate particulars thereof. the tribunal held.....
Judgment:

Dipak Kumar Sen, J.

1. In the assessment year 1959-60, Messrs. R.H.N. Choudhuri & Co. Private Ltd. was assessed to income-tax. In the course of the assessment proceedings the Income-tax Officer found a deposit of Rs. 4,000 in the account of one S. L. Rathor, and 4 hundi loans amounting to Rs. 1,00,500. The assessee was asked to explain the nature and source of the same. Explanations were offered but were not accepted by the Income-tax Officer who added back the same as the assessee's income. Interest on the hundi loans to the extent of Rs. 7,814 was also disallowed as deduction.

2. The assessee went up on appeal and the Appellate Assistant Commissioner by his order dated the 28th March, 1969, accepted the deposit of Rs. 4,000 as genuine. So far as the hundi loans were concerned he allowed a credit of Rs. 55,500. Addition was partly reduced accordingly.

3. The Income-tax Officer in the meantime had referred the matter to the Inspecting Assistant Commissioner for levy of penalty who issued a show-cause notice on the 16th February, 1966, and levied a penalty after considering the assessee's reply.

4. The assessee preferred an appeal to the Tribunal against the order of penalty. Two points were taken in the appeal before the Tribunal. Firstly, it was urged that the assessment was made under Section 23(3) of the Indian Income-tax Act, 1922 and, as such, penalty could not be levied under Section 271(1)(c) of the Income-tax Act, 1961.

5. It was also urged that simply because some additions were confirmed in the assessment proceedings, no penalty could be levied. The fact of additions would not show that the assessee had concealed particulars of his income or had deliberately furnished inaccurate particulars thereof. The Tribunal held in favour of the assessee and accepted both the contentions raised by the assessee. The Tribunal held that no penalty could be levied under the provisions of the new Act for offences committed under the provisions of the old Act. On the merits, the Tribunal followed the decision of this court in Anwar Ali's case : [1967]65ITR95(Cal) as also another subsequent decision also of this court in the case of Satish Churn Law : [1969]71ITR275(Cal) .

6. From this order of the Tribunal the following questions of law have been referred for our consideration under Section 256(1) of the Income-tax Act, 1961 :

'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment having been made under Section 23(3) of the Indian Income-tax Act, 1922, on 13th March, 1964, no penalty could be levied under Section 271(1)(c) of the Income-tax Act, 1961 ?

2. Whether, on the facts and in the circumstances of the case, merely because some addition was upheld by the Appellate Assistant Commissioner in the quantum appeal, it could be said that no onus lay on the department to prove that the assessee had concealed the particulars of its income and as such the penalty, in the instant case, could be said to be correctly levied ?'

7. We have heard the submissions on behalf of the revenue. No one has appeared on behalf of the assessee.

8. So far as question No. 1 is concerned, it is covered by the decision of the Supreme Court in the case of Jain Brothers v. Union of India : [1970]77ITR107(SC) . Therefore, the question No. 1 has to be answered in the negative and in favour of the revenue.

9. So far as question No. 2 is concerned, almost similar facts have been agitated before us in a number of cases and this court has uniformly applied in such cases the principles of law laid down by the Supreme Court in the case of Commissioner of Income-tax v. Anwar Ali : [1970]76ITR696(SC) and Commissioner of Income-tax v. Khoday Eswarsa and Sons : [1972]83ITR369(SC) . The Tribunal has found that it is not sufficient that the Appellate Assistant Commissioner has upheld part of the additions to come to the conclusion that the assessee has concealed his income or has furnished inaccurate particulars thereof. This is a finding of fact. Apart from that, the Supreme Court has laid down that the entirety of the facts and circumstances should lead to the reasonable inference that there has been such concealment of income or such furnishing of inaccurate particulars. That has to be found by the Tribunal. The Tribunal has found otherwise.

10. So far as the onus is concerned, the Supreme Court has held that it is for the revenue to establish that the assessee has concealed part of his income before penalty could be levied.

11. That is at present the settled law. The upholding by the Assistant Commissioner of a part of addition in the appeal from the assessment order, in our opinion, is not sufficient to discharge the onus cast upon the revenue.

12. Therefore, we answer question No. 2 in the affirmative and in favour of the assessee.

13. In the facts and circumstances of the case, there will be no order as to costs.

Deb, J.

I agree.


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