COMMISSIONER OF INCOME TAX Vs. GURBACHAN LAL

JUDGEMENT

(1.) Pursuant to direction given by this Court under Section 256(2) of Income Tax Act, 1961 (in short, the 'Act'), following question has been referred for opinion of this Court by Income Tax Appellate Tribunal, Delhi Bench 'A', New Delhi (in short- the Tribunal'):

(2.) Factual position, as borne out by the Statement of Case, is essentially as follows: Assessee, who was assessed in the status of an individual filed return showing income of Rs. 5.000.00 for assessment year 1966-67. A sum of Rs. 48,500.00 was recovered in cash from his house during a search by the Customs Authorities. On being asked about the nature and source of the aforesaid sum, he explained it as follows: (i) Loan from Shri Babu Ram on 6.3.1966 Rs. 15,000.00 (ii) Loan from M/s. Jain Bullion Company, Meerut against ornaments pledged by the assessee on 10.3.1966 Rs. 10,000.00 (iii) Sale proceeds of silver coins sold to Madan Lal Vinod Kumar Jain, Delhi On 8.3.1966 Rs.23,374.00 Income Tax Officer, during assessment proceedings, did not accept the evidence produced by assessee in respect of loans as mentioned at Serial Nos. 1 and 2 above and also in relation to the claim regarding sale of silver coins. He added the entire sum of Rs. 48,500.00 as income from undisclosed sources. Appeal was preferred by assessee before Appellate Assistant Commissioner (in short, "AAC"), against assessment and the said Authority confirmed the addition. On a further appeal, the Tribunal directed deletion of Rs. 23,374.00 on the ground that evidence, both documentary and oral, produced by assessee in respect of sale of silver coins for Rs. 23.374.00 was satisfactory. It, however, did not accept the explanation in respect of alleged loans and found that they were not genuine. In the meantime, proceedings under Section 271(1)(c) of the Act was initiated for concealment of income. Considering the quantum involved, matter was referred to the Inspecting Assistant Commissioner of Income Tax (in short, IAC). A show-cause notice was issued by IAC and reply was submitted by assessee. Assessee's primary stand was that merely because there were some inconsistencies between the statements made before the Customs Authorities and Income Tax Officer, the same was not sufficient to disbelieve the explanation offered as regards the genuineness of loans. IAC did not accept the stand and felt that assessee had made conflicting statements and inconsistencies were not explained. The explanation offered was found to be not acceptable and penalty of Rs. 50,000.00 was imposed. Matter was carried in appeal before the Tribunal by assessee. It was pointed out that the Tribunal, in the quantum of appeal, had already deleted addition of Rs. 23,374.00 and maintained remaining additions on the ground that it was not satisfied about the genuineness of loans. It was further pleaded that loan was advanced by Shri Babu Ram on the basis of pronote and M/s. Jain Bullion Company on the basis of ornaments pledged. It was further stated that Shri Babu Ram was produced before Income Tax Officer and his statement was recorded, where he stated about source from which the loan was given. Mere disbelief of the evidence was not sufficient for attracting penal consequence. Tribunal was of the view that mere rejection of the explanation or disbelief of the Tribunal in the quantum appeal was not sufficient to prove concealment. There has to be some positive material or positive circumstance to suggest that assessee had concealed his income. It was held that on consideration of facts and circumstances of the case, no concealment had been proved and therefore, penalty was directed to be deleted. Revenue moved for reference under Section 256(1) of the Act, which was rejected. But pursuant to direction given by this Court under Section 256(2) of the Act, question, as set out above, has been made.

(3.) We have heard learned Counsel for Revenue. There is no appearance on behalf of assessee in spite of notice. Primary stand of learned Counsel for Revenue is that the effect of Explanation added to Section 271(l)(c) of the Act has been lost sight of by the Tribunal. After addition of the Explanation, the position of law which emerged from the decision of the Apex Court in Commissioner of Income Tax v. Anwar Ali, (1970) 76 ITR 696, was no longer applicable. It is pointed out that returned income was Rs. 5,000.00. Even after deletion of the addition made by Income Tax Officer to the extent of Rs. 23,374.00, the Explanation was clearly applicable as the assessed income was far above the permissible limit.