Calcutta H.C : Whether, on the facts and in the circumstances of the case and in view of the disclosure petition filed by the assessee under s. 271(4A) of the IT Act, 1961, there was any burden on the Department to further prove that the amounts added by the ITO represented revenue receipts and the assessee concealed the same, for the purpose of imposing penalty under s. 271(1)(c) of the IT Act, 1961 ?

AJIT K. SENGUPTA, J. :

At the instance of the CIT, West Bengal, the following question of law has been referred to this Court under s. 256(2) of the IT Act, 1961, for the asst. yr. 1961-62: “Whether, on the facts and in the circumstances of the case and in view of the disclosure petition filed by the assessee under s. 271(4A) of the IT Act, 1961, there was any burden on the Department to further prove that the amounts added by the ITO represented revenue receipts and the assessee concealed the same, for the purpose of imposing penalty under s. 271(1)(c) of the IT Act, 1961 ?”

The facts briefly stated are that in the course of the assessment, the ITO noticed credits in the names of several persons in the books of the assessee. It was represented that these amounts represented loans taken on hundis from those persons. Confirmation letters from them had been filed with a view to verify the genuineness of the transactions. Notices were issued to these parties by the ITO. In regard to some of them, the notices could not be served and some of them did not comply with the notices. Three of the parties, however, appeared before the ITO but did not produce their accounts. In these circumstances, the ITO refused to accept the contention put forth by the assessee and treated a sum of Rs. 1,67,500 which was the peak of the credits as the assessee’s income from undisclosed sources. In view of this, he initiated proceedings under s. 271 (1)(c) and on the ground that the minimum penalty imposable would exceed Rs. 1,000, referred the matter to the IAC. It transpires that subsequent to the assessment, the assessee filed a petition under s. 271(4A) of the Act before the CIT purporting to be a voluntary disclosure. However, this was not accepted by the CIT. It was, inter alia, contended before the IAC that, in view of the petition that had been filed, no penalty should be imposed. The IAC did not accept this contention and he came to the conclusion that it had been admitted that the alleged loans were bogus and, therefore, the assessee had concealed its income and deliberately furnished inaccurate particulars. He also noticed that, as against the assessment, no appeal had been filed. He imposed a penalty of Rs. 40,000.

In the appeal by the assessee before the Tribunal, it was contended that apart from the circumstance that, for want of proof, the ITO added the amount of the loans as income of the assessee, there was no proof that the amounts did represent the income of the assessee and the imposition of penalty, in the circumstances was untenable. It was contended that the disclosure petition had been filed with a view to get the matter settled if possible and the same having not been accepted, the conclusion that there was any admission of concealment of income was unjustified.

A copy of the petition that had been presented had also been filed before the Tribunal. Reliance was placed on the judgment of the Supreme Court in CIT vs. Anwar Ali (1970) 76 ITR 696 (SC). The Tribunal, however, set aside the order of penalty holding that, in the facts and circumstances of this case, imposition of penalty was not justified.

The Tribunal, on going through the disclosure petition, held as follows : “In the petition that had been filed under s. 271(4A), it had been specifically stated that there were several genuine loans but unfortunately they could not be proved as the lenders were not agreeable to come forward to prove the loans advanced by them except in a few cases. There was no unequivocal admission that the amounts represented the income of the assessee as such. In these circumstances, and when the petition was not accepted, to spell out an admission on the part of the assessee so as to impose any penalty on him is quite unjustified.”

The question is whether there is any admission by the assessee regarding concealment of any income. Since the disclosure petition was not accepted, the Revenue cannot rely on such disclosure petition unless there is a categorical admission to the effect that the cash credits represented the concealed income of the assessee of the year in question.

It will be evident from the disclosure petition that there is no admission by the assessee that the cash credits were not genuine or that they represented the concealed income of the assessee. Unless there is any such admission in the disclosure petition specifically of any particular transaction or transactions, the burden would still lie on the Revenue to prove that the assessee had concealed the particulars of his income or furnished inaccurate particulars thereof before any penalty can be imposed. The Tribunal has also mentioned that the admission was made on the sole ground that the assessee was unable to discharge the burden.

The assessee had filed confirmation letters and some of the parties appeared before the ITO and confirmed the loans though in respect of some, notices could not be served and some of them did not comply with the notices. Merely on this ground and in the circumstance that an addition was made, it cannot be inferred that the assessee has concealed his income or furnished inaccurate particulars thereof. It may also be mentioned that the Department did not accept the petition under s. 271(4A) and, accordingly, they cannot rely on the disclosure petition for the purpose of imposing penalty on the assessee without there being any unequivocal admission. Reference has been made to the decision of this Court in the case of Bhagwanji Bhawanbhai and Co. vs. CIT (1982) 28 CTR (Cal) 375 : (1983) 141 ITR 640. There, this Court held that the statements made in the disclosure petition have to be examined and it has to be found out whether the said statements could lead to the inference that there was an admission that income relating to the relevant year had been concealed. As already indicated, after consideration of the disclosure petition, the Tribunal held that there is no such admission in the disclosure petition. We also do not find any such statement in the disclosure petition to support the contention that the assessee made admission of concealment.

For the reasons aforesaid, we answer the question in this reference in the affirmative and in favour of the assessee. There will be no order as to costs.

K. M. YUSUF, J.

I agree.

[Citation : 176 ITR 299]