COMMISSIONER OF INCOME TAX Vs. NAV BHARAT AUTOMOBILES

JUDGEMENT

(1.) AT the instance of the Commissioner of Income-tax, Kanpur, the Income-tax Appellate Tribunal, Delhi, has submitted this statement of the case and the following question of law for the opinion of this court:

(2.) THE assessee is a registered firm carrying on the business at Agra. During the course of assessment proceedings for the year 1964-65, the Income-tax Officer noticed certain cash credits in its account books in the names of certain parties. THE Income-tax Officer treated all these credits as income of the assessee from undisclosed sources as he was not satisfied with the explanation of the assessee with regard to the source and nature of these credits. THE Income-tax Officer also initiated penalty proceedings with a view to levy penalty under Section 274/271(1)(c) of the Act presumably on the ground that the assessee had concealed its income represented by the cash credits. THE Inspecting Assistant Commissioner of Income-tax examined the items of cash credits separately and found that in respect of some cash credits the assessee had led no evidence and in respect of others the evidence led by it was not acceptable. He, accordingly, held that all the cash credits had rightly been treated as the assessee's income inasmuch as he had not included this income in its return and was guilty of concealment. He, accordingly, levied a penalty of Rs. 35,754. On appeal the Income-tax Appellate Tribunal knocked off the penalty relying upon the decision of the Supreme Court in Commissioner of Income-tax v. Anwar Ali, 1970 76 ITR 696 where the Supreme Court has held that penalty proceedings under Section 28 of the Indian Income-tax Act, 1922, which corresponds to Section 271(l)(c) of the Act of 1961, are penal in nature and as such the onus lies upon the department to prove that a particular deposit or a cash credit is the income of the assessee which he has deliberately concealed. THE mere fact that the assessee's explanation with regard to the deposit or cash credit had not been believed and the amount has been held to be the assessee's income is not by itself sufficient to sustain the charge of concealment. THE Tribunal found that in the instant case the department did not discharge its onus inasmuch as it had placed no other material on the record except that the assessee's explanation with regard to the cash credits was not believable.