COMMISSIONER OF INCOME TAX Vs. MOHAN MALLAH

JUDGEMENT

(1.) IN this case the assessee who was a contractor in Lodna Colliery filed his return for the asst. yr. 1953 -54 declaring an income of Rs. 9,771. In the course of assessment it was discovered that the assessee had invested a sum of Rs. 68,000 in Parikh Stores in the relevant accounting year in the name of his wife. On being asked to explain the source of this investment, the assessee alleged that he had taken a loan of Rs. 38,000 from three parties and had also invested Rs. 30,000 out of his own savings. The three alleged creditors were examined. One of these creditors, Sri Satnarain Kundu, totally denied having advanced a loan of Rs. 10,000 to the assessee. The other two creditors, Sri Jogendra Nath Sen and Sri Binod Kumar Sen, admitted that they had advanced loans to the assessee, but the ITO disbelieved their statements. The ITO, however, accepted the version of the assessee that he had withdrawn a sum of Rs. 25,000 from the bank for investment. As regards the balance of Rs. 43,000, the ITO held that it represented the secret income of the assessee and added that amount to the taxable income of the assessee. The assessee took the matter in appeal to the AAC, but the appeal was dismissed. The Tribunal also affirmed the view taken by the AAC and upheld the addition of Rs. 43,000 to the taxable income of the assessee. Thereafter the ITO issued a notice to the assessee under S. 28(3) of the IT Act to show cause why a penalty should not be imposed upon him. After hearing the assessee the ITO held that there was willful concealment of the income on the part of the assessee and, therefore, imposed the penalty of Rs. 11,000. The order of the ITO was upheld in appeal by the AAC. The assessee took the matter in appeal to the Tribunal which allowed the appeal and set aside the imposition of penalty on the ground that the Department had not proved that the assessee had committed the offence of suppressing the true income.

(2.) UNDER S. 66(1) of the IT Act the Tribunal has stated a case on the following question of law for the determination of the High Court :

(3.) THIS view has been expressed by the House of Lords in Fattorini (Thomas) (Lancashire) Limited vs. IRC (1943) 11 ITR (Suppl) 50. It was pointed out by Lord Wright at page 65 of the report that the onus in such a proceeding was not of an ambulatory or shifting character but the onus was finally upon the Crown to prove its right to impose what was a severe penalty. The same view has been expressed in a recent decision of this High Court in Khemraj Chagganlal vs. CIT (1960) 38 ITR 523 (Pat) and a subsequent decision of this High Court in Lakshmi Narain Shambhuram vs. CIT (1963) 49 ITR 350 (Pat). In our opinion, the present case falls within the principle laid down in these two authorities, and the IT Department has not in this case discharge the onus of showing that the assessee is guilty of concealment of the particulars of his income or deliberate furnishing of accurate particulars of such income. On behalf of the IT Department, Mr. Tarkeshwar Prasad invited us to look at the order of the Tribunal in the assessment proceeding. But there is no finding of the Tribunal even in the order of the assessment appeal that there was willful suppression of income on the part of the assessee. The only finding of the Tribunal in that order is that the assessee had not satisfactorily explained the source from which he said he derived the additional income. On behalf of the IT Department reliance was placed on a decision of this High Court in Murlidhar Tejpal vs. CIT (1961) 42 ITR 129 (Pat) and also in Bhagwandas Shyamsundar vs. CIT (1962) 45 ITR 566 (Pat), but, in our opinion, the material facts of the present case are different and the principle laid down in those cases cannot govern the present case.