INCOME TAX OFFICER Vs. BALUBHAI HEMCHAND SHAH

JUDGEMENT

(1.) THE Income Tax Officer, Ward-1, Mattancherry, is the revenue. THE assessee is the respondent. THE assessment year is 1979-80. THE assessee's residential premises was searched under section 132 of the Income Tax Act (hereinafter referred to as 'the Act') on 23-1-1979. A sum of Rs. 73,118.50 was found in the house of the assessee at the time of search. A statement was recorded. THE assessee stated that no part of the said sum of Rs. 73,118.50 was reflected in any books of accounts maintained either by the assessee or his employer M/s Gandhi Sons. THE amount of Rs. 73,118.50 was found in a steel almirah found in the assessee's bedroom. THEre were two items. First item of Rs. 9,500 kept in a paper packet, according to the assessee, is out of the sale proceeds of Rs. 12,000 received from his native place, Simar in Gujarat representing sales proceeds of household articles sold there in November, 1978. He stated that out of this, Rs. 2,500 was spent and the balance was kept in a paper packet. Regarding the balance amount of Rs. 63,618.50, the assessee represented that it was unaccounted income of M/s Gandhi Sons, of which he is the manager. THE assessee also did not have anything to show that the amount of Rs. 12,000 represented the sale proceeds. Regarding Rs. 63,118.50, he represented that it was the consideration by the sale of old empty chests, old gunny bags and old empty drum of M/s Gandhi Sons. He also stated that it was not included in the account of Mls Gandhi Sons. Thus, the assessee did not have any proof to show that the unaccounted money did not belong to him.

(2.) SUBSEQUENTLY, in response to a notice under section 132(5) of the Act, the assessee stated that a sum of Rs. 60,000 belongs to M/s Kerala Produce Dealers, of which his son was a partner. It was also stated that his son stays with him and the amount belonging to M/s Kerala Produce Dealers was kept in the cupboard on 22-1-1979. Sum of Rs. 3,600 was stated to be the sale proceeds of old empty cases of M/s Gandhi Sons. He put forward the same contention with regard to Rs. 12,000. The assessment was finalised on 23-11-1981 on a total income of Rs. 1,36,070. While making the assessment the amount of Rs. 73,000 was also assessed under the head 'other sources'. Thereafter, the assessing officer initiated penalty proceedings under section 271(1)(c) of the Act.

(3.) SHRI P.K. Raveendranatha Menon, learned senior counsel appearing for the department, contended that the Tribunal as well as the Commissioner (Appeals) went wrong in relying on the decision in CIT v. Pawan Kumar Dalmia (supra). According to him, under Explanation 1 to section 271(1)(c) of the Act, burden was on the assessee to show that there was concealment of income. There was a presumption under Explanation 1 to section 271(1)(c) of the Act that the income represented concealed income and hence, penalty was leviable. SHRI Raveendranatha Menon also brought to my notice the following observations of the Tribunal : "At the worst it might be a factor for not considering the assessee's explanation satisfactory but it cannot render him liable for penalty". SHRI Raveendranatha Menon contended that the burden of proof was placed on the revenue . It should have been placed on the assessee.