- (1.) IN this case the assessee is a joint Hindu family carrying on the business of cloth at Gaya in the name of Nirmal Ram Hari Prasad. For the assessment year 1949-50, the assessee made a return of the income showing a net loss of Rs. 32,532. While examining the account books of the assessee the INcome-tax Officer discovered that a sum of Rs. 36,300 shown in the cash books was not carried over to the ledger account. The INcome-tax Officer also discovered that certain deposits amounting to Rs. 37,000 were in two banks, namely, the Bengal Central Bank Limited and the Punjab National Bank Limited, in the names of the family members of the assessee. The particulars of the deposits were as follows : JUDGEMENT_566_ITR45_1962Html1.htm
(2.) BUT these deposits were not shown in the account books of the assessee. The Income-tax Officer held that there was concealment of income and ultimately computed the income of the business of the assessee at Rs. 89,907. The total income of the assessee for the assessment year was computed at Rs. 1,02,072. An appeal was taken to the Appellate Assistant Commissioner against this assessment and the Appellate Assistant Commissioner reduced the total income by a sum of Rs. 5,528. The Appellate Tribunal gave further relief to the assessee by restricting the amount of addition to Rs. 75,000. Thereafter, the Income-tax Officer initiated proceedings against the assessee under section 28(1) (c) of the Income-tax Act. After hearing the explanation of the assessee, the Income-tax Officer levied a penalty of Rs. 42,000. The assessee preferred an appeal before the Appellate Assistant Commissioner but the appeal was dismissed. The assessee took the matter in further appeal to the Appellate Tribunal which partially allowed the appeal and reduced the penalty to a sum of Rs. 33,000. Under section 66(2) of the Income-tax Act the Appellate Tribunal has submitted the following question of law for the opinion of the court : "Whether, on the facts and circumstances of this case, the penalty of Rs. 35,000 has been legally imposed upon the assessee under section 28(1) (c) of the Income-tax Act ?" On behalf of the assessee, Mr. Dutta put forward the argument that in a proceeding taken under section 28(1) (c) of the Income-tax Act the onus lay upon the income-tax department to show that the assessee was guilty of the offence mentioned in the section, and the mere fact that the assessee was not able to establish by satisfactory evidence the explanation offered by it with regard to the concealed income did not mean that the explanation was false or that the assessee has been guilty of deliberate suppression of the particulars of its income within the meaning of section 28(1) (c) of the Act. In support of this argument learned counsel referred to a decision of this High Court in Khemraj Chagganlal v. Commissioner of Income-tax and a decision of the Bombay High Court in Commissioner of Income-tax v. Gokuldas Harivallabhdas. The principle of law laid down by these authorities is undoubtedly correct, but the question for determination is whether the present case falls within the principle laid down by these authorities. In our opinion, the material facts in the present case are quite different from those in Khemraj Chagganlal v. Commissioner of Income-tax on which Mr. Dutta placed great reliance. In Khemrajs case the question was with regard to the income standing in the assessees books in the name of Srimati Purnima Debi. The explanation of the assessee was that the money belonged to Srimati Purnima Debi and the money represented the sale proceeds of gold ornaments of Srimati Purnima Debi. In that case, the account of the assessee showed the amount in the name of Srimati Purnima Debi. There was also evidence produced before the income-tax authorities, namely, a Purja for the sale of gold on the relevant dates, and there was a record in the books of the firm that the gold which was sold was made by melting the ornaments of Srimati Purnima Debi. In the present case, the material facts are quite different. The first important circumstance referred to by the Appellate Tribunal is that in the cash books a sum of Rs. 36,000 has been shown to have been received from various parties. But this amount has not been carried over to the ledger account and there is an attempt on the part of the assessee to create an impression that these items of cash credit had been carried over to the ledger so that the Income-tax Officers attention may not be drawn to it by scrutinising the accounts. On this part of the case, the Appellate Tribunal has stated as follows in the course of its order dated 23rd January 1957 : "The assessees argument that only 3,000 was involved and it was brought in and out again and again cannot stand scrutiny for the reason that if it was the same sums there was no need to bring the cash credits first of all in the names of other persons and secondly in the names of different persons on the different occasions. We looked into the cash book entries and as it appears to us entries had been made beneath each of the items so as to create an impression that they had been ledgerised so that the Income-tax Officers attention may not be drawn to it while scrutinising the accounts. The assessee has not proved that the previous withdrawals were with him and were available for introduction as claimed now. In the circumstances, we are left with no doubt that the assessee concealed particulars of income." The other important circumstance is with regard to the deposits in the name of the family members of the assessee in the Bengal Central Bank and the Punjab National Bank. With regard to these fixed deposits the Income-tax Officer has observed that the assessee has been taking loans from these two Banks on collateral security of these fixed deposits made in the name of the family members of the assessee. At the end of the accounting year the overdraft in the Bengal Central Bank was Rs. 2,15,556 and in the Punjab National Bank was Rs. 1,77,375. This circumstance has been taken into account by the income-tax authorities in coming to the inference that there was deliberate attempt on the part of the assessee to conceal its income. The Appellate Assistant Commissioner has referred also to the circumstance that these fixed deposits have not been shown in the account books of the assessee, though they really belonged to the assessee and overdrafts have been taken by the assessee on the collateral security of these deposits. In our opinion, the present case falls within the principles laid down by this High Court in a later case, Murlidhar Tejpal v. Commissioner of Income-tax. In the facts and circumstances of the present case, we are satisfied that there was sufficient material before the income-tax authorities for holding that there was a willful suppression by the assessee of the particulars of its income within the meaning of section 28(1) (c) of the Income-tax Act and accordingly a penalty of Rs. 35,000 has been validly imposed upon the assessee under that section.
(3.) FOR these reasons, we answer the question of law referred by the Income-tax Appellate Tribunal against the assessee and in favour of the income-tax department. There will be no order as to costs of this reference. Question answered accordingly.;