High Court Of Bombay : Nagpur Bench
CIT vs. Ratnasi Deoji Patel (HUF)
Section 256(2)
Asst. Year 1982-83, 1983-84, 1984-85, 1985-86
J.P. Devadhar & B.P. Dharmadhikari, JJ.
IT Appln. Nos. 81, 84, 85 & 87 of 1994
16th April, 2007
Counsel Appeared :
A.S. Jaiswal, for the Applicant : C.J. Thakkar, for the Respondent
JUDGMENT
J.P. Devadhar, J. :
All these 4 reference applications under s. 256(2) of the IT Act, 1961 are filed by the Revenue against the common order passed by the Tribunal dt. 9th Dec., 1993 in R.A. Nos. 353, 354, 355 and 356/Nag/1993, declining to refer the following questions of law for the opinion of this Court :
“1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in affirming the order of the CIT(A) in cancelling the penalty levied by the AO under s. 271(1)(c) of the Act ?
Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the exercise books found in the possession of the assessee, though they are not books of account but in strickest sense of the terms, they are books of account ?
Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that once the AO accepted the offer of the assessee in the proceedings under s. 132(5) and also accepted the returns filed by the assessee then the prima facie presumption that can be raised is this that the there was some communication between the Department and the assessee ?
Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the books of account found in the possession of the assessee contained the names of the various other members of the family and the explanation of the assessee that the income offered by him for taxation with a view to buy peace in fact belonged to the different members of the family is supported by concrete material ?
Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that in this case, there was no admission of concealment and the assessee himself returned certain items of investments as his income in the returns filed for the first time and they were accepted by the Department and hence the decision of the Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd. vs. CIT (1987) 64 CTR (SC) 199 : (1987) 168 ITR 705 (SC) is clearly applicable to the facts of the present case ?
Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that there is no evidence on record to prove that there was surrender of income as concealed income ?
Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that none of the Explanations to s. 271(1)(c) of the Act are applicable to the facts of this case ?”
The assessment years involved herein are asst. yrs. 1982-83 to 1985-86. On 29th/30th Aug., 1985, there was a search action carried out in the residential premises of the assessee and his sons, as also the business premises of M/s Patel Saw Mills and Patel Timber Industries at Chandrapur. During the course of search, variousincriminating documents were found at the residential premises of the assessee as well as the business premises of M/s Patel Timber Industries and Patel Saw Mills, Chandrapur. It was also noticed that the assessee has made huge investments by lending money on promissory notes, construction of house property, etc. Upto the date of search the assessee had not filed any return of income for the assessment years in question. Upon notice issued under s. 148 of the Act for the asst. yrs. 1982-83 to 1984-85 and notice under s. 139(2) of the Act, for the asst. yr. 1985-86, the assessee filed returns of income on 31st Oct., 1985 declaring the income which was noticed from the note books seized during the course of search. In the returns the assessee had stated that the amounts of pro-notes and amounts invested in the construction of the house property were out of ancestral funds and also from accumulated agricultural income of past several years. According to the assessee the said amounts do not represent the income of the year of assessment in which investments were made. However, since there was no documentary evidence available with the assessee with regard to the said investment, with a view to have peace the assessee has offered the amount voluntarily. The AO accepted the amount offered by the assessee by passing assessing orders for the assessment years in question, but levied penalty under s. 271(1)(c), by invoking Explns. 1, 4(a) and 5 to s. 271(1)(c) of the Act.
On appeal, the CIT(A) after considering the various decisions, held that the levy of penalty under s. 271(1)(c) of the Act, was not justified. The Tribunal has upheld the order of CIT(A). Since the reference application filed by the Revenue under s. 256(1) of the Act was rejected by the Tribunal, the Revenue has filed these applications under s. 256(2) of the Act.
In all these cases, it is not in dispute that the returns were not filed by the assessee prior to the date of search. During the course of search an exercise book was seized, wherein it was noticed that the assessee had made investment in promissory notes and also in construction of house. Mr. Thakkar, the learned counsel appearing on behalf of the assessee/respondent, relied upon the decision of the Hon’ble apex Court in the case of C.B.I. vs. V.C. Shukla & Ors. AIR 1998 SC 1406 and submitted that the note books seized during the course of search were books of account maintained by the assessee in the regular course of business and therefore, the Expln. 5 to s. 271 (1)(c) of the Act, invoked by the AO was not justified. This Court in the case of Sheraton Apparels vs. Asstt. CIT (2002) 175 CTR (Bom) 651 : (2002) 256 ITR 20 (Bom) has held that the books recorded facts, but not maintained for computation of income, cannot be said to be books of accounts. In this view of the matter, the question of law do arise out of the order passed by the Tribunal. Accordingly, we allow the applications on the following two questions of law, which read as under :
“1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in affirming the order of the CIT(A) in cancelling the penalty levied by the AO under s. 271(1)(c) of the Act ?
2. Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the exercise books found in the possession of the assessee, though they are not books of account but in strickest sense of the terms, they are books of account ?”
6. The Tribunal is directed to forward the statement of case as expeditiously as possible. All these applications are allowed. Rule is made absolute, with no order as to cost.
[Citation : 295 ITR 206]
