M KALIAPPA GOUNDER Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee is the managing director of V. C. K. Bus Service(Private) Ltd., Coimbatore. He was also plying one taxi and one lorry. In response to the notice under section 22(2) of the Income-tax Act, the assessee filed a return of income on August 19, 1960, in respect of the assessment year 1960-61, corresponding to the accounting year ending March 31, 1960, admitting a total income of Its. 13, 507. In the course of the examination of the accounts, it was found that the assessee had introduced cash amounting to Rs. 50, 000 on April 1, 1959. THE assessee explained that the amount was cash available on hand as on that date. THE assessee was required to prove the existence of the cash of Rs. 50, 000 as on April 1, 1959. He stated that during 1958, there were credits in the accounts of three individuals as under Rs1. V. P. Velliangiri Gounder 30, 0002. Ramana Gounder 19, 0003. Champa Gounder 12, 000In the year ending March 31, 1959, it was the explanation given by the assessee, that the three persons were repaid their deposits, but that the amounts were still available with him for his use.

(2.) THE Income-tax Officer did not accept the credits in the name of Velliangiri Gounder and Ramana Gounder, and, naturally, therefore, the payments of those credits as well. THEse amounts appear to have been assessed in the earlier year, and, therefore, ultimately the Income-tax Officer found that the assessee's explanation to the extent of Rs. 35, 975 is acceptable. So far as the credit in the name of Champa Gounder was concerned, even in the earlier year, the Income-tax Officer accepted the credit as genuine and since the amount was found entered as paid on July 5, 1958, the Income-tax Officer consider ed that the sum of Rs. 14, 025 represents undisclosed income of the assessee and, accordingly, he brought this amount to assessmentAn appeal and a further appeal filed by the assessee to the Tribunal were unsuccessful in regard to this amountIn the meanwhile, the Income-tax Officer also initiated proceedings under section 28(1)(c) and held that there was concealment of this income by the assessee and, therefore, he was liable to penalty. Accordingly, he levied a penalty of Rs. 14, 000, which was reduced by the Appellate Assistant Commissioner to Rs. 10, 000. On a further appeal, the Tribunal had reduced it to Rs. 7, 000THEre was no fresh material available in the penalty proceedings, but the Tribunal and the authorities below have refused to accept the explanation of the assessee that though he had made an entry of repayment to Champa Gounder on July 5, 1958, the amount was still available with the assessee on April 1, 1959THE learned counsel for the assessee submitted that merely on the ground that his explanation was not acceptable, it cannot be held that the said sum of Rs. 14, 025 was undisclosed income. In this connection, he relied on the decision of the Supreme Court in Commissioner of Income-tax v. Anwar Ali . In that case, the Supreme Court pointed out that proceedings under section 28(1)(c) are penal in character and that the burden is on the department to prove that a particular amount constituted the income of the assessee.