COMMISSIONER OF INCOME TAX Vs. NIPANI TOBACCO STORES

JUDGEMENT

(1.) AS directed by this court a statement of the case has been submitted by the Income-tax Appellate Tribunal, Patna Bench-B, Patna, on a reference under Section 256(2) of the I.T. Act, 1961, and the following question of law has been referred to this court for opinion :

(2.) DURING the penalty proceeding it was urged on behalf of the assessee that in the quantum appeal (meaning thereby the appeal from the assessment order) the AAC had reduced the addition of cash credit by Rs. 44,000 and had sustained the addition of Rs. 50,000 only. The IAC held that the assessee had concealed the property income by way of cash credits and had committed default under Section 271(1)(c) of the Act. He, therefore, imposed a penalty of Rs. 13,565, Aggrieved by the order of the IAC the assessee went up in appeal before the Tribunal and it was submitted that the assessee had not concealed any income as the addition was made simply on account of non-acceptance of the explanation of the assessee. In the alternative, it was argued that the penalty imposed was excessive, We are, however, not concerned in this case with this alternative limb of the argument put forth on behalf of the assessee before the Tribunal. The learned counsel for the assessee placed before the Tribunal a copy of the order of the Tribunal itself in the quantum appeal (the appeal against the order of the AAC in the assessment proceeding). The Tribunal had discussed the cash credits of Rs. 50,000 and disallowed the interest paid thereon. There was a credit of Rs. 25,000 in the name of Sri Shanti Bhai Patel and the other credit of Rs. 25,000 in the name of Sri Birendra Narain Singh. In support of the genuineness of the first credit the assessee had filed an affidavit from the creditor who was an employee of the assessee and was earning Rs. 4,000 per annum. The said creditor also owned 8 1/2 bighas of land and his statement about the source of income was that the amount in credit was the income from his land. The explanation of his credit was not accepted. The other creditor, Shri Birendra Narain Singh, was also examined. He had stated that he had made the deposit out of his agricultural income. His statement was also not believed in the assessment proceeding and both the cash credits ultimately were treated even by the Tribunal as the income of the assessee from undisclosed sources. The Tribunal was the view that the cash credits remained unexplained and thus the addition of Rs. 50,000 was upheld. The Tribunal also noticed that in the quantum appeal an addition of Rs. 20,000 made by the ITO had wrongly been deleted by the AAC and in that regard the order of the assessing officer was restored.

(3.) THE only contention of Mr. Rajgarhia, appearing for the Revenue, has been that there is no clear finding that the initial onus placed by the Explanation upon the assessee had been discharged in this case. We are afraid, the argument is entirely misconceived in law. We have already extracted para. 9 of the appellate order of the Tribunal wherein the Tribunal, after being alive to and conscious of the applicability of the Explanation to Section 271(1)(c) of the Act, has proceeded rightly upon the principle of law that what had to be seen in the case was whether the assessee had succeeded, in placing a probable case relating to the cash credits. And the facts relating to the Explanation offered by the assessee with regard to the cash credits in question and the evidence adduced in that behalf were all considered by the Tribunal in para. 6 of the appellate judgment. THE Tribunal was, therefore, very much alive to all the facts and materials which were on the record. THE Tribunal was very much consious of the legal position that the Explanation to Section 271(1)(c) of the Act was attracted. It was not oblivious of the fact that the initial burden of proof lay upon the assessee to prove a negative fact. It was very much alive to the legal position that the proof of such negative fact could be said to have been discharged by merely placing a preponderance of probabilities by the assessee and if that had been done then the onus shifted back on the Revenue to prove the positive fact of either fraud or gross or wilful neglect on the part of the assessee or furnishing by the assessee of inaccurate particulars. All the principles of law have been correctly applied. All the materials on the record have been duly taken notice of. THE mere technicality put forward by Mr. Rajgarhia with regard to the lacking of one sentence in para. 9, namely, to the effect that the initial onus placed upon the assessee of the proving of negative fact was, therefore, discharged was too hair-splitting an argument to be entertained, it would be piling unreason upon technicality. An identical argument had been advanced by the learned counsel in Gopal Vastralaya's case, [1980] 122 ITR 527 (Pat), where the contention was repelled by this court at p. 538 of the judgment. THE learned standing counsel invited our attention to a number of decisions of some courts to, wit, Gumani Ram Siri Ram v. CIT, 1972 85 ITR 67, Addl. CIT v. Karnail Singh V. Kaleran, 1974 94 ITR 505, CIT v. Gujarat Travancore Agency, 1976 103 ITR 149 [FB], CIT v. K.C. Behera, 1976 103 ITR 479, Vishwakarma Industries v. CIT, 1982 135 ITR 652 [FB], CIT v. M. Habibullah, 1982 136 ITR 716, CIT v. Swamp Cold Storage and General Mills, 1982 136 ITR 435 and CIT v. Parmanand Advani, 1979 119 ITR 464. We do not see any principle of law discussed in these cases which go, in any way, to shake the validity and legality of the two judgments of this court. As a matter of fact the Full Bench of the Punjab High Court in the case of Viswakarma Industries v. CIT, has quoted with approval what has been said in Patna Timber Works' case and so far as Addl. CIT v. Karnail Singh V. Kaleram, [1974] 94 ITR 505 (Punjab) is concerned, that has already been discussed in Patna Timber Works' case, [1977] 106 ITR 452 (Pat). THEre is no conflict on principles of law amongst any of these cases and there is no case holding contrary to the view taken by this court in the aforementioned two Bench decisions.