COMMISSIONER OF INCOME-TAX VS THAKUR DASS
1997 P T D 1231
[213 ITR 205]
[Delhi High Court (India)]
Before K. Shivashankar Bhat and D.K. Jain, JJ
COMMISSIONER OF INCOME-TAX
Versus
Sh. THAKUR DASS
Income-tax Reference No.277 of 1977, decided on 28/09/1994.
Income-tax---
----Penalty---Concealment of income---Cash credits-- for assessment year 1963-64 return filed in 1968---Cash credits added as income and penalty levied---Explanation to S.A (1)(c) applicable---Levy of penalty valid---Indian Income Tax Act, 1961, S. 271(1)(c), Explanation.
In the reassessment proceedings initiated by the Income-tax Officer, credits in the accounts of two of the partners were treated as unexplained income of the assessee. Penalty proceedings were also initiated. On a reference:
Held, that for the assessment year 1963-64, the return was filed in 1968 in response to notice issued in 1968 and, therefore, the Explanation to section 271(1)(c) of the Income Tax Act, 1961, was applicable. The Tribunal was not justified in concealing the penalty levied under section 271(1)(c) of the Act.
CIT (Addl.) v. Jeevan Lal Shah (1994) 205 ITR 244 (SC) and CIT v. Anwar Ali (1970) 76 ITR 696 (SC) ref.
Rajendra with D.N. Mathotra for the Commissioner.
Nemo for Respondents. .
JUDGMENT
K. SHIVASHANKAR BRAT, J.---In respect of the assessment year 1968-69, the following questions have been referred under section 256 of the Income Tax Act, 1961, for our consideration:
"(1) Whether, on the, facts and in the circumstances of the case, the Tribunal was legally correct in cancelling the penalty of Rs.13,000 levied under section 271(1)(c) of the Income Tax Act, 1961?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the principle laid down by the Supreme Court in the case of CIT v. Anwar Ali (1970) 76 ITR 696 was applicable in the instant case particularly when the return of income was filed after insertion of the Explanation to section 271(1) which came into force on April 1, 1961?"
Instead of narrating the facts, the relevant part of the order of the Appellate Tribunal could be read:
"The assessee is an individual and the assessment relates to the assessment year 1963-64, the relevant previous year of which ended on March 31, 1963. The assessee was deriving income from Kirana business and commission, besides he claimed he was a partner in an unregistered firm called Thakur Dass Manobar Lal. It appears, the assessment on the assessee was originally completed on a total income of Rs.13,345 on November 12, 1964. Though it was claimed that the firm of Messrs Thakur Dass Manohar Lal was a genuine firm with four partners including the assessee, the Income tax Officer assessing the firm treated it as the individual business of the assessee and held the other two partners, Thakur Dass Kathuria and Devi Dass, as his benamidars. There were cash deposits of Rs.6,500 each in their accounts in the books of the said firm. The Income-tax Officer treated these cash deposits as the unexplained income of the said firm and taxed it. In the appeal filed by the said firm before the Appellate Assistant Commissioner, the Appellate Assistant Commissioner deleted the addition of Rs.13,000 on the view that since those two partners were held to be Benamidars of the assessee, the proper course would be to consider those credits in the hands of the assessee. To bring to tax the said cash credits as income of the assessee, proceedings were taken under section 148 in response to which the assessee filed return disclosing the income of Rs,6,050 on May 2, 1968. In the reassessment made by the Income tax Officer, the sum of Rs.13,000 i.e., the credits, in the accounts of Thakur Dass and Devi Dass, were treated as the unexplained income of the assessee and that they did not belong to the persons in whose accounts they appeared. The order of the Income-tax Officer is made Annexure ' A' and forms part of the case. The Income-tax Officer also initiated proceedings for the levy of Rs.13,000 as income concealed. The Income-tax Officer referred the matter to the Inspecting Assistant Commissioner for the levy of penalty as he found the minimum penalty leviable exceeded Rs.1,000."
It is necessary to note that the relevant year looks to be 1963-64, but the assessee filed the return after 1964 only, in response to a notice issued in the year 1968. The return was filed on October 19, 1968. If so it is clear that the Explanation added to section 271(1) would govern the return filed by the assessee. The scope of this Explanation was considered by the Supreme Court in CIT (Addl.) v. Jeevan Lal Shah 1994 205 ITR 244, wherein the Supreme Court has held that the decision in Anwar Ali's case (1970) 76 ITR 696 (SC) is no longer good law.
Having regard to the aforesaid decision the question referred to us shall have to be answered in the negative and in favour of the Revenue. The reference is answered accordingly.
M.B.A./1175/FC Order accordingly.