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Shri Loknath Chowdhury Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 172 of 1984
Judge
Reported in(1986)50CTR(Cal)340,[1985]155ITR291(Cal)
ActsIncome Tax Act, 1961 - Sections 68, 69 and 271(1)
AppellantShri Loknath Chowdhury
RespondentCommissioner of Income-tax
Appellant AdvocateR.N. Dutt and ;S.K. Dutt, Advs.
Respondent AdvocateB.K. Naha, Adv.
Excerpt:
- ajit kumar sengupta, j.1. this reference under section 256(1) of the i.t. act, 1961, relates to the assessment year 1975-76. the assessee and his brother, sushil kumar choudhury constructed a building at new road, alipore, calcutta, during the previous years relevant to the assessment years 1974-75 to 1976-77. the assessee showed the total cost of construction at rs. 5,29,562 and that in the assessment year 1975-76 at rs. 3,82,293. this was not accepted by the ito and the departmental valuer was required to estimate the cost of construction. the departmental valuer determined the total cost of construction of the building at rs. 7,74,900 and that in the assessment year 1975-76 at rs. 5,59,700. the difference between the cost of construction relating to the assessment year 1975-76 at rs......
Judgment:

Ajit Kumar Sengupta, J.

1. This reference under Section 256(1) of the I.T. Act, 1961, relates to the assessment year 1975-76. The assessee and his brother, Sushil Kumar Choudhury constructed a building at New Road, Alipore, Calcutta, during the previous years relevant to the assessment years 1974-75 to 1976-77. The assessee showed the total cost of construction at Rs. 5,29,562 and that in the assessment year 1975-76 at Rs. 3,82,293. This was not accepted by the ITO and the departmental valuer was required to estimate the cost of construction. The departmental valuer determined the total cost of construction of the building at Rs. 7,74,900 and that in the assessment year 1975-76 at Rs. 5,59,700. The difference between the cost of construction relating to the assessment year 1975-76 at Rs. 1,77,407 was treated by the ITO as income from undisclosed sources for the said assessment year and half of the said amount, i.e., Rs. 88,703, being the assessee's half share, was assessed in his hands. Penalty proceedings were initiated under Section 271(1)(c) of the Act in the course of the assessment proceedings in respect of the said unexplained investment. In appeal against the quantum assessment, the said addition was reduced by Rs. 17,500 and a sum of Rs. 71,203 was taken as the unexplained investment of the assessee,

2. It was contended before the ITO that penalty should not be imposed when the addition has been made on the basis of estimate only and the statements regarding the cost of construction by the assessee were not proved to be incorrect. The contention was not accepted by the ITO who, therefore, with the previous approval of the Inspecting Assistant Commissioner, passed an order imposing a penalty of Rs. 48,115 which was the amount of tax sought to be evaded. On appeal, the Commissioner of Income-tax (Appeals) also rejected the contention of the assessee and confirmed the order of penalty.

3. The assessee went on appeal before the Tribunal. It was contended by the assessee before the Tribunal that the cost of construction was determined finally by the Commissioner of Income-tax (Appeals) on estimate. In this regard, all the estimates made by the departmental valuer as wellas the assessee's valuer were rejected by him. It was argued that penalty should not be imposed for additions to income based on estimate. The Tribunal observed that in this case it was seen from the penalty order that the income added was Rs. 71,203 and that the total income returned by the assessee was Rs. 28,342 and the total income assessed was Rs. 1,20,957. There was no doubt that the total income returned by the assessee was less than 80% of the total income finally assessed. So the ITO, according to the Tribunal, was correct in applying the Explanation to Section 271(1)(c) of the Act as it stood before its amendment by the Taxation Laws (Amendment) Act, 1975.

4. The Tribunal further observed that the principles laid down in the case of Rahmat Development & Engineering Corporation v. CIT : [1981]130ITR602(Cal) , will apply to the facts of this case. The Tribunal, therefore, held that in the instant case, it had to be held that the amount of Rs. 71,204 added to the income returned by the assessee was the income of the assessee. According to the Tribunal, there could not be any doubt that the assessee had failed to return the correct income. So the Tribunal further observed that under the Explanation to Section 271(1)(c) (as it stood before its amendment with effect from April 1, 1976), such failure to return the correct income had to be deemed to be concealment of particulars of his income or furnishing of inaccurate particulars of his income unless the assessee proved that the failure did not arise from any fraud or gross or wilful neglect on his part. In the instant case, according to the Tribunal, the assessee had not produced any material to show that this failure did not arise from any fraud or gross or wilful neglect on his part. So the Tribunal held that there could not be any doubt that the ITO had come to the correct conclusion that the assessee concealed particulars of his income within the meaning thereof under Section 271(1)(c) of the Act. The Tribunal, therefore, confirmed the levy of penalty.

5. On the aforesaid facts, at the instance of the assessee, the following questions of law have been referred under Section 256(1) of the Act to this court :

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the decision in CIT v. Bhuramal Manik chand : [1981]130ITR129(Cal) and CIT v. Apsara Talkies : [1985]155ITR303(Mad) (infra) relied on by the appellant was of no help to the assessee in view of the decision in Rahmat Development & Engineering Corporation v. CIT : [1981]130ITR602(Cal) ?

(2) Whether the Tribunal's finding that the said decision in Rahmat Development & Engineering Corporation v. CIT : [1981]130ITR602(Cal) , was given in almost similar circumstances is correct having regard to the facts recorded in the judgment as reported therein ?

(3) Whether, the Tribunal's finding that the assessee had not produced any material to show that the failure to return the income assessed did not arise from any fraud, or gross or wilful neglect on his part is justified by the facts and the circumstances of the case ?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal was right in upholding the levy of penalty under Section 271(1)(c) of the Act in the instant case ?'

6. It is contended by Mr. R.N. Dutt, learned advocate for the assessee, that the ITO initiated penalty proceedings for additions in assessment being the difference in. investment in the construction of building as estimated by the Departmental Valuation Officer and as disclosed by the assessee. The assessee filed a valuation report which was not accepted. In the quantum appeal, the Commissioner of Income-tax (Appeals) neither accepted the Departmental valuation nor the assessee's valuation. The quantum of unexplained investment was arrived at on the basis of estimate and on such estimate, it is contended, no penalty can be imposed. He has also contended that this court has explained the judgment in the case of Rahmat Development & Engineering Corporation : [1981]130ITR602(Cal) , and, therefore, the mere rejection of the explanation of the assessee with regard to cost of investment cannot be a ground for imposition of penalty. Alternatively, Mr. Dutt relying on the judgment of this court in the case of CIT v. W.J. Walkar and Company : [1979]117ITR690(Cal) , submits that the court should send back the case to the Tribunal without answering the reference with a direction that after giving a reasonable opportunity to the parties of being heard, the Tribunal should decide whether any penalty was imposable on the assessee.

7. Mr. B.K. Nalia, learned advocate on behalf of the Revenue, has contended that the Tribunal is right in confirming the penalty and this court in the case, of Rahmat Development & Engineering Corporation : [1981]130ITR602(Cal) , has laid down that penalty can be imposed on unexplained investment. He has submitted that the decision in the case of Rupabani Theatres : [1981]130ITR747(Cal) , will have on application to the facts of this case.

8. The contention of the learned advocates for the parties have to be considered mainly in the light of the two decisions of this court, one in the case of Rahmat Development & Engineering Corporation v. CIT : [1981]130ITR602(Cal) , and the other in the case of CIT v. Rupabani Theatres P. Ltd. : [1981]130ITR747(Cal) .

9. In Rahmat Development & Engineering Corporation's case : [1981]130ITR602(Cal) , the assessee constructed a building. The construction took ten years and the assessee showed the amounts spent on construction inhis books of account produced before the ITO during the relevant assessments. According to the books of the assessee, the amount spent up to March 31, 1970, appeared to be Rs. 14,14,410. On the other hand, the departmental valuer estimated the cost of the building at Rs. 23,58,500. The ITO added the difference between the two amounts in different years under Section 69 and initiated penalty proceedings. The proceedings were referred to the IAC who observed that there had been gross and wilful neglect to disclose the correct expenditure and imposed penalty. In the quantum appeal, the Tribunal reduced the estimate of the cost of construction to Rs. 20,57,756 but upheld the order of penalty in its entirety.

10. This court observed (p. 609):

'Section 69 deals with unexplained investment and provides that where in any financial year immediately preceding the assessment year, the assessee had made investments which are not recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the ITO, satisfactory, the value of the investment may be deemed to be the income of the assessee of such financial year. Therefore, the effect of Section 69 is that if there is an unexplained investment or unentered investment, then the value of such investment would be deemed to have been earned by the assessee and would be the income of the assessee for that financial year. Now, in this case, as we have mentioned before, there was a building constructed by the assessee and for these sums of money, which admittedly had been spent by the assessee spread over a large number of years, 10 years to be precise, the assessee had accounted in his books of account, which undoubtedly were produced at the time of the assessment, as otherwise there could be no question of such books being available to the ITO, which indicated that a certain amount had been spent in the construction of that building. According to these books of account which were produced before the ITO, during the course of the assessment, the amount spent on investment of the building up to 31st March, 1970, appeared to be Rs. 14,14,410. On the other hand, the departmental valuer had found that the building had been constructed at a cost which he estimated at Rs. 23,58,500. Therefore, unless the assessee had given the source of investment of this additional amount, whatever be the amount, that amount must have come from some source of income of the assessee. In the facts of this case, as established, we are of the opinion that Section 69 of the Act was clearly attracted and if Section 69 was clearly attracted, the argument of the assessee, that the assessee was not obliged to furnish the particulars of his investment by law or to submit any particulars of return of investment by law and as such there cannot be any question of concealment of income or of furnishing inaccurate particulars arises,cannot be accepted. The moment Section 69 is attracted, it becomes, by the fiction of law, the income of the assessee. If it becomes the income of the assessee and if that income is not returned, then that return remains unreturned.'

11. This court further observed (p. 611);

'It appears to us, however, that Section 69 of the I.T. Act, 1961, makes the unexplained investment to be the income of the assessee and that position has to be accepted in the penal proceedings because that has been confirmed though for a reduced amount by the Income-tax Appellate Tribunal in the quantum appeal which will be deemed to be the income of the assessee for that financial year. Therefore, it is not open, in our opinion, by virtue of Section 69, to say that it does not represent the income. The law deemed such an unexplained investment to be the income of the assessee. Therefore, once it was deemed to be the income of the assessee, the observations of the Supreme Court in the case of CIT v. Anwar Ali : [1970]76ITR696(SC) referred to hereinbefore, could not be of much assistance to the assessee because it was no longer open to say that the inference of rejection of the assessee's explanation did not give rise to the fact that the disputed amount did not represent the income. The inference follows as the deeming provision makes such unexplained investment as the income of the assessee by the fiction of law and unless we boggle our imagination, against which the Supreme Court has repeatedly warned us, we must treat this unexplained investment as the income of the assessee for the year in question.'

12. In Rupabani Theatres P. Ltd. : [1981]130ITR747(Cal) , the assessee had shown certain cash credits aggregating to Rs. 26,000 in the names of four ladies alleged to be related to one of the directors of the assessee-company. The ITO did not accept the explanation offered with regard to these cash credits and consequently disallowed the interest claimed thereon. The returned income became less than 80% of the assessed income as a result of the addition and the ITO initiated penalty proceedings under Section 271(1)(c). The IAC held that penalty was liable to be imposed. The Tribunal held that the burden of proof on the assessee was of a negative nature and could be discharged if there were nothing positive to show that the assessee committed fraud or gross or wilful neglect. The Tribunal examined the facts and found that the interest on credits had been paid mainly by cheques and there was nothing to show that the amount of Rs. 26,000 and interest thereon was the assessee's taxable income. The Tribunal held that penalty could not be levied. There, this court, upholding the view taken by the Tribunal, observed (p. 764) :

'Section 68 provides that where any sum is found credited in the books of an assessee maintained for any previous year and the assesseeoffers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the ITO, satisfactory, the sum so credited may be charged to income-tax 'as the income of the assessee of that previous year'. So, unexplained cash credits found in the books of account, by the operation of Section 68, are charged to income-tax as the income of the assessee for that previous year. Significantly, however, Section 69, in the case of unexplained investments, uses the expression that the value of such unexplained investment 'may be deemed to be the income of the assessee for such financial year'. It does not merely stop by providing that it may be charged to income-tax but the deeming provision makes that income the income of the assessee...

'In Section 69 it does not make this sum to be the deemed income of the assessee. Section 69 is the section which is applicable in the facts of the instant case, that is to say, the sum found credited in the books of account is a particular sum which is credited in the books of account in respect of which satisfactory explanation to the revenue authorities has not been given by the assessee. The assessee is only liable to income-tax in respect of its income for the previous year.... In Income-tax Reference No. 355 of 1977 [Rahmat Development & Engineering Corporation v. CIT : [1981]130ITR602(Cal) ] (judgment delivered on 3rd July, 1980 and 7th July, 1980), we had to deal with the imposition of penalty in the case of an unexplained investment. The facts of that case were significantly different and we need not detain ourselves with the facts of that case. There, most of the decisions that we have referred to hereinbefore, have been considered and we came to the conclusion that in that case, as the unexplained investments had to be deemed to be the income of the assessee for the year by virtue of the attraction of Section 69 and in the background of the other facts found both for that assessment year and subsequent assessment years, the revenue had discharged the onus of proof that was on it even after the coming into operation of the Explanation to Section 271(1)(c) of the Act.'

13. In Rupabani Theatres : [1981]130ITR747(Cal) , this court was concerned with the scope of Section 68 read with the Explanation to Section 271(1)(c) and not with Section 69 and the reference to Section 69 in the judgment in Rupabani Theatres quoted above is an obvious mistake.

14. In the case of CIT v. Bhuramal Manikchand : [1981]130ITR129(Cal) , which was also relied on by the assessee before the Tribunal, penalty was sought to be imposed on the income added under Section 68 of the Act. It was held there that the provisions of Section 68 of the Act, under which cash credits found in the accounts are treated as income of the previous year in which they are found, are confined to assessment proceedings and they do not extend topenalty proceedings. It was further held there that since there was no finding that the amount constituted the income of the assessee in the relevant previous year, penalty could not, therefore, be imposed on that basis. We are concerned here with a case under Section 69 read with Explanation to Section 271(1)(c). If the unexplained investment is deemed to be the income of the assessee under Section 69, there is no further onus on the Department to prove that the amount added as the value of unexplained investment is the income of the assessee. Where, however, a cash credit is assessed as income of the assessee, the onus still lies on the Revenue to prove that such addition represents the income of the assessee. In this context, this court observed that where unexplained investment is deemed to be the income of the assessee, the principles of the Supreme Court decision in the case of Anwar Ali : [1970]76ITR696(SC) , will not be applicable whereas in the case of cash credits added as income of the assessee, the principles laid down in the case of Anwar Ali will hold good. The moment Section 69 is attracted, the value of the unexplained investment becomes, by fiction of law, income of the assessee, when the assessee had not returned the correct income to the extent of the value of such unexplained investment added to the assessment. There is, therefore, a non-disclosure of this income. The question is whether, on the facts and in the circumstances of this case, such non-disclosure of income amounts to concealment. In this case, the assessee asked for time for furnishing the particulars including the details of construction and evidence in regard to the period for the financial year 1975-76. In spite of opportunities given to the assessee, the assessee did not furnish the details of construction and evidence in support thereof. The assessee was given more than one opportunity to explain and reconcile the difference between the cost of construction as determined by the valuation officer of the Income-tax Department and the cost of construction as disclosed by the assessee in his books of account. The assessee submitted written objections no doubt but did not deal specifically with the points raised by the ITO or the departmental Valuation Officer. The valuation officer of the Income-tax Department while determining the investment involved in the construction of the building indicated as to how the cost of construction shown by the assessee's valuer is unreal. The valuation of the assessee's valuer is based on under-pricing of the materials. The Departmental valuer has taken into consideration CPWD Schedule of 1972 and escalation in price of cement, steel, physical progress and other facts and figures. The assessee could not produce the particulars and evidence regarding the investment. The assessee's valuer did not make any independent estimate of the investment on the basis of the prevailing market rates but only took the cost of materials from vouchers produced by the assessee. His estimate was a reproduction of the value of investment givenby the assessee. The valuer of the petitioner omitted a large number of items and the rates of materials taken by the said valuer were also found to be very low in comparison with the prevailing market rates. The rates adopted for different items of works in the construction were also found abnormally low. Where the assessee fails to produce the particulars and evidence as required to show the value of investment, the cost of construction has to be arrived on the basis of an estimate. Such estimate, however, is to be based on objective factors. As all the details were not available with the ITO as regards the investment made by the assessee, the ITO had to make a fair estimate of the cost of construction in this case. In doing so, he has taken into consideration the Departmental Valuer's report. The assessee was confronted with the various points on which the Departmental Valuer differed from the assessee's valuer, but the assessee could not give any satisfactory explanation to any of the infirmities pointed out by the Departmental Valuer. It was for the assessee to explain the nature and source of the investment made which he had failed to do. If, on these facts, the authorities came to the conclusion that the assessee was guilty of concealment of income represented by the value of the unexplained investment, it cannot be said that such conclusion is unreasonable. The assessee failed to discharge the onus that lay on him. In view of the Explanation, the assessee, was 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. The assessee did not place materials or the primary facts or the circumstances which in all reasonable probabilities would have shown that he was not guilty of any fraud or gross or wilful neglect. It is true that the expression 'concealment' itself conveys a positive act or mental attitude. The entirety of the circumstances in this case reasonably point to the conclusion that the assessee had consciously concealed the particulars of Ms income or had furnished inaccurate particulars thereof.

15. One other contention of Mr. R.N. Dutt, learned advocate for the assessee, requires to be considered. It is his contention that where additions have been made to the returned income on the basis of an estimate, the Explanation to Section 271(1)(c) is not attracted and penalty is not leviable. In support of his contention, he has relied on a decision of the Rajasthan High Court in the case of Saroj Devi v. WTO . That was a case of reopening of the assessment under the W.T. Act, The assessee in that case had filed the returns for the assessment years 1968-69, 1969-70 and 1970-71, showing net wealth including jewellery and gold and silver ornaments, the valuation of which was based on the certificate of an approved valuer. The WTO accepted the return and completed the assessments for all the said years. Later, when the assessee filed returnfor the assessment year 1971-72, valuing the ornaments and jewellery at a much higher figure in comparison to the valuations of the years 1969-70 and 1970-71, the WTO suspected that the valuation disclosed by the asses-see for the assessment years 1969-70 and 1970-71 were low and since certain audit objections were raised in respect of the assessments of those years, the WTO, on directions from higher authorities, directed the assesses to get the jewellery revalued and also issued notices asking them to explain the difference in valuation. The assessee explained that they had based the valuation on the report of the approved valuer and had also indicated the increase or decrease in the items whenever it took place while the returns were filed. They also alleged that there was a steep rise in price in selected jewellery in the year 1971 and in that respect, they furnished the certificate of the approved valuers. The WTO rejected the explanation of the assessee and issued notices to them under Section 17 of the W.T. Act, 1957, for reopening the assessments. On a writ petition filed by the assessee, the Rajasthan High Court held that the assessee had disclosed all the items of jewellery and ornaments and had given their valuation on the basis of the approved valuer's report. They did not conceal any primary facts and it was not their fault if the WTO did not make a proper enquiry about the valuation before he made the assessments. That case has no application here. The assessment cannot be reopened on the basis of the difference in valuation as all the primary facts were disclosed by the assessee at the time of original assessment. In this case, the assessee has failed to produce evidence in the course of regular assessment in support of his valuation of the investment made by him. The assessment had been made on the materials as available with the ITO and the penalty was imposed thereafter. As indicated earlier, when the assessee fails to produce the necessary particulars and evidence, an estimate has to be made by the ITO which has been done in this case. Such estimate was more or less confirmed by the Tribunal. Under Section 69, the value of an investment as added in the assessment is deemed to be the income of the assessee. Therefore, there is a non-disclosure to that extent.

16. Mr. Dutt then relied on the decision in the case of Addl. CIT v. Jankidas Mohanlal : [1984]150ITR588(Patna) . In that case, for the assessment year 1964-65, the ITO made various additions to the trading account and certain additions as income from undisclosed sources to the book results shown by the assessee and determined the total income at Rs. 9,38,292 which was later on enhanced by Rs. 1,00,000 under Section 154. Thereafter, the ITO initiated penalty proceedings under Section 271(1)(c) of the I.T. Act, 1961, and referred the matter to the IAC who imposed a penalty of Rs. 1,14,360. In the appeal against the assessment, the AAC deleted the cash credits andreduced the total income to Rs. 2,96,840. On further appeal, the Tribunal further reduced the total income to Rs. 2,46,840. The Tribunal took into consideration that the additions and disallowances were made just on estimate and it was never proved with cogent materials by the Department that these additions and disallowances were either earned by the assessee or were not spent for the purpose of business and thereby the assessee concealed the income and furnished inaccurate particulars. The Tribunal took the view that penalty could not be imposed unless mens rea was established and even if the Explanation to Section 271(1)(c) were applicable, concealment had to be established and, hence, cancelled the penalty order. On a reference, the Patna High Court upheld the view taken by the Tribunal. The Patna High Court was concerned with a case where additions were made to the trading account and certain additions were also made as income from undisclosed sources to the book results shown by the assessee. It was not a case of addition under Section 69. There was no material to hold that the additions made were the income of the assessee. In that case, the penalty was not sustained not because the additions were made on estimate but on the ground that mens rea was not established.

17. On the contrary, in the case of Addl. CIT v. Lakshmi Industries and Cold Storage Co. Ltd. : [1984]146ITR492(All) , the Allahabad High Court held that even where additions have been made to the returned income on the basis of an estimate, the Explanation is attracted and penalty is leviable, unless the assessee proves that failure to return the correct income was not due to fraud or any gross or wilful neglect on his part.

18. In the case of CIT v. Rajan : [1985]151ITR189(Mad) , on the basis of a search conducted in the assessee's premises, in which an anamath note book was found and seized, additions were made to the assessment to income-tax made on the assessee for the assessment year 1966-67, and the AAC on appeal sustained the additions to the extent of Rs. 25,000. The IAC levied penalty under Section 271(1)(c), but the Tribunal on appeal deleted the same on the ground that in the assessment proceedings, the addition of Rs. 25,000 was made only on the basis of an estimate and, hence, the provisions of Section 271(1)(c) would not be attracted. On a reference, the Madras High Court held that if the return submitted by the assessee had been accepted without reference to the entries in the anamath book, it would have resulted in underestimate of income. Since the anamath book formed the basis of the addition to the income returned, the assessee should be taken to have furnished inaccurate particulars of income whether the addition was by way of estimate or actuals. The penalty provisions of Section 271(1)(c) will be applicable even where an assessment is made on the basis of an estimate or where an addition to the income disclosed is madeon an estimate. Consequently, the provisions of Section 271(1)(c) were attracted in that case.

19. The question whether the provision of Section 271(1)(c) of the Act would be applicable in a case where the additions have been made to the returned income on the basis of an estimate will depend on the nature of the addition and facts and circumstances of the particular case. When an addition is made tinder Section 69, such addition is deemed to be the income of the assessee for the purpose of levy of penalty. But when an addition is made under Section 68 of the Act and such addition is charged to income-tax as income of the assessee, it will not be deemed to be the income for the purpose of the levy of penalty. It has to be established that the sum added in the assessment is income of the assessee. But in view of the Explanation, a further question still remains as to whether there is any fraud or gross or wilful neglect on the part of the assessee in not returning the correct income. In order to attract Section 271(1)(c), it is necessary for the ITO to be satisfied that the assessee has concealed the particulars of his income or furnished inaccurate particulars thereof. The Explanation to Section 271(1)(c) of the Act enjoins that in case there is statutory difference between the total income returned by the assessee and the income assessed, the assessee shall, unless he proves that the failure to return the correct income did not arise from fraud or gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. The entirety of the circumstances must lead to the conclusion that the conduct of the assessee is such that there was fraud or gross or wilful neglect in not returning the correct income.

20. The assessee did not dispute that there was a difference between the estimated value of the cost of construction and the recorded cost in the assessee's books of account. The assessee was asked to reconcile the said difference in the cost of construction. The assessee sought to give an explanation but that explanation was not accepted. Unless the assessee had given the source of the investment and explained the difference between the cost of investment as disclosed by the assessee or estimated by his valuer and the cost as estimated by the Departmental Valuer, the amount of such difference would be deemed to be the income of the assessee under Section 69. On the facts and in the circumstances of the case, we are of the view that the Tribunal was right in holding that the assessee failed to return the correct income and the assessee had concealed the particulars of his income or furnished inaccurate particulars of such income. The Tribunal was justified in coming to the finding that the assessee did not place any material to show that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on the part of the assessee. The Tribunalwas also right in arriving at its conclusion that the decision in Rahamat Development & Engineering Corporation : [1981]130ITR602(Cal) was rendered in similar circumstances and the said decision would govern the case of the assessee.

21. In the premises aforesaid, we answer all the questions in this reference in the affirmative and in favour of the Revenue.

22. The assessee will pay costs of this reference.

23. Leave is given to file the copy of the order under Section 271(1)(c) passed by the ITO.

Dipak Kumar Sen J.

24. I agree.


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