Shri Ramjibhai Mohanlal Chaudhry, Ahmedabad v. The ACIT.,GNR Circle,, Gandhinagar

ITA 607/AHD/2011 | 2005-2006
Pronouncement Date: 31-03-2011 | Result: Dismissed

Appeal Details

RSA Number 60720514 RSA 2011
Assessee PAN AARPC8327R
Bench Ahmedabad
Appeal Number ITA 607/AHD/2011
Duration Of Justice 1 month(s) 3 day(s)
Appellant Shri Ramjibhai Mohanlal Chaudhry, Ahmedabad
Respondent The ACIT.,GNR Circle,, Gandhinagar
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 31-03-2011
Date Of Final Hearing 18-03-2011
Next Hearing Date 18-03-2011
Assessment Year 2005-2006
Appeal Filed On 25-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND SHRI D.C. AGRAWAL ACCOUNTANT MEMBER ITA NO.607/AHD/2011 & ITA NO.866/AHD/2009 ASSESSMENT YEAR :2005-06 DATE OF HEARING:18.3.11 DRAFTED:23.3.11 SHRI RAMJIBHAI M CHAUDHRY C/O V.P.PATEL & CO. A/102 AKSHARDHAM TOWERS UNDER BRIDGE SHAHIBAUG AHMEDABAD PAN NO. AARPC8327R V/S . ACIT GANDHINAGAR CIRCLE GANDHINAGAR (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI V.P. PATEL AR REVENUE BY:- SHRI MUDIT NAGPAL SR-DR O R D E R PER D.C. AGRAWAL ACCOUNTANT MEMBER:- THIS APPEAL FILED BY ASSESSEE RAISING FOLLOWING GR OUNDS:- 1. THE LD. CIT(A) ERRED ON FACTS IN REJECTING THE ADJOURNMENT APPLICATION FOR 3 DAYS AND PASSED THE ORDER WHERE THE APPELLAN T AR HAD REASONABLE CAUSE FOR NON APPEARANCE FOR 3 DAYS ON A CCOUNT OF TIME BARRING ASSESSMENTS. 2. THE LD. CIT(A) ERRED ON FACTS IN SUSTAINING THE ADDITION TOWARDS AGRICULTURE INCOME; WHERE THE APPELLANT HAD FURNISH ED THE EVIDENCES OF OWNERSHIP OF LAND AND THE A.O HAD ACCEPTED THE AGRI CULTURAL INCOME IN PRECEDING YEARS IN SCRUTINY ASSESSMENTS. 2. THE APPEAL IS DELAYED BY THREE DAYS. IT WAS SUBM ITTED BY THE LD. A.R. THAT THE AUTHORIZED REPRESENTATIVE OF ASSESSEE WAS BUSY IN TIME BARRING ASSESSMENT. THEREFORE HE COULD NOT FILE APPEAL. AC CORDINGLY AFTER HEARING THE ITA NO.607/AHD/11 & 866/AHD/09 A.Y. 2005-06 SH. RAMJIBHAI M CHAUDHRY V. ACIT GNG CIR PAGE 2 PARTIES WE CONDONE THE DELAY AND DECIDE TO PROCEED WITH THE APPEAL FOR DISPOSAL ON MERIT. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADI NG IN HYBRID SEEDS AND ALSO SHOWING AGRICULTURAL INCOME. HE HAD DECLARED A LOSS OF RS.5 27 737/-. ASSESSING OFFICER HOWEVER MADE ADDITION U/S.68 OF THE I.T. ACT IN RESPECT OF UNEXPLAINED CREDITS OF RS.4 14 200/- AND ALSO DISAL LOWED THE CLAIM OF AGRICULTURAL INCOME MADE AT RS.2 18 310/-. THE REAS ONS ADVANCE BY THE LD. ASSESSING OFFICER FOR MAKING THESE ADDITIONS WERE T HAT THE ASSESSEE DID NOT PRODUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CONTENTION THAT IT IS RECEIVING SALE PROCEED OF AGRICULTURAL PRODUCE AND HENCE EARNING AGRICULTURE INCOME. NO COPY OF SALE DEED OR ANY RECEIPT CONFIRM ING THE SALE OF AGRICULTURE PRODUCE WAS SUBMITTED. THE ASSESSING OFFICER NOT ON LY DID NOT ACCEPT THE OWNERSHIP OF THE LAND BUT ALSO OF EARNING OF AGRICU LTURE INCOME. HE ACCORDINGLY TREATED A SUM OF RS.4 40 200/- BEING TH E DEPOSIT IN A CAPITAL ACCOUNT AND CLAIM OF AGRICULTURE INCOME AT RS.2 80 310/- AS UNEXPLAINED AND MADE ADDITION. 4. BEFORE LD. CIT(APPEALS) NO ONE APPEARED EVEN THO UGH HE HAD GIVEN SEVERAL HEARINGS SUCH ON 24-11-2008 10-12-2008 AND 29-12-2008. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAD ON TH E LAST OCCASION SOUGHT ADJOURNMENT ON THE GROUND THAT HIS SCRUTINY ASSESSM ENTS ARE PENDING BEFORE ASSESSING OFFICERS AND ARE GETTING TIME BARRED. LD. CIT(A) ALSO NOTED THAT NO EVIDENCE HAS BEEN SUBMITTED IN RESPECT OF DEPOSITS IN THE CAPITAL ACCOUNT AND OF AGRICULTURAL INCOME. THUS OBSERVING AS UNDER LD CIT(A) DISMISSED THE APPEAL OF ASSESSEE:- 2.2 AS STATED ABOVE THE APPELLANT HAS DECIDED NOT PRESENT HIS CASE. AS PER THE GROUND OF APPEAL REPRODUCED ABOVE REFER ENCE HAS BEEN MADE TO THE FACT THAT NOTICE MIGHT NOT SERVED UPON HIM. THIS STATEMENT OF THE APPELLANT IS CONTRARY TO WHAT HAS BEEN WRITT EN IN THE ASSESSMENT ORDER. THE AUTHORIZED REPRESENTATIVE OF THE APPELLA NT SHRI V.P. PATEL HAS ATTENDED BEFORE THE ASSESSING OFFICER FROM TIME TO TIME AND THE CASE HAS BEEN DISCUSSED. THE ASSESSING OFFICER HAS ISSUED A NOTICE ITA NO.607/AHD/11 & 866/AHD/09 A.Y. 2005-06 SH. RAMJIBHAI M CHAUDHRY V. ACIT GNG CIR PAGE 3 ON14/09/2007 ASKING FOR EXPLANATION TO WHICH REPLY HAS BEEN GIVEN ON18/12/2007 WHICH APPEAR TO BE A BLAND REPLY WIT HOUT ANY DETAILS OR DOCUMENTARY EVIDENCES. THEREFORE THE ASSESSEES AR GUMENT OF NON- SERVICE OF NOTICE OR LACK OF OPPORTUNITY HAS NO LEG S TO STAND ON. THE ONUS FOR PROVING THE DEPOSITS I.E. THE ONUS U/S 68 AS ALSO THE ONUS FOR EXPLAINING THE INCOME DECLARED AND VERSIFIED IN ASS ESSEES RETURN OF INCOME WAS OF THE APPELLANT ONLY WHICH REMAINED UN DISCHARGED IN SPITE OF THE ASSESSING OFFICER HAVING GIVEN OPPORTUNITY O F MORE THAN 18 MONTHS I.E. THE DATE WHEN THE FIRST NOTICE U/S. 14 3(2) DATED 03/05/2006 WAS ISSUED AND THE LAST REPLY DATED 18/12/2007 FILE D BY THE ASSESSEE. IN THE FACE OF SUCH SITUATION THE ACTION OF THE ASSES SING OFFICER IS PERFECTLY JUSTIFIED. BOTH THE ADDITIONS MADE THEREFORE ARE CO NFIRMED. 5. BEFORE US LD AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE SUBMITTED THAT AUTHORIZED REPRESENTATIVE WAS NOT ABLE TO APPEAR BE FORE LD. CIT(A) AS HE WAS BUSY IN TIME BARRING MATTERS. THE LD. AR HAD TA KEN VERY SHORT ADJOURNMENT WHICH WAS DENIED BY LD. CIT(A). HOWEVE R NO AFFIDAVIT OF ADVOCATE/CA REPRESENTING BEFORE LD. CIT(A) HAS BEEN FILED TO THE EFFECT THAT HE FOR HIS OWN REASONS COULD NOT APPEAR BEFORE LD. CIT(A). LD. AR SUBMITTED THAT IN THE ASSESSMENT YEAR 1999-00 AGRICULTURAL IN COME OF RS.3 47 500/- HAS BEEN ACCEPTED IN RESPECT OF WHICH COPY OF ASSESSMEN T ORDER HAS BEEN FILED. LD. DR ON THE OTHER HAND SUBMITTED THAT THERE IS NO EXPLANATION WHAT TO SAY ABOUT ANY SATISFACTORY EXPLANATION AS TO WHY COMPLI ANCE OF NOTICE ISSUED BY ASSESSING OFFICER AND LD. CIT(A) WAS NOT MADE. IT I S FOR THE ASSESSEE TO SUBMIT EVIDENCE IN SUPPORT THE CLAIM OF DEPOSITS IN THE CAPITAL ACCOUNT AS WELL AS EARNING OF AGRICULTURAL INCOME. ON THE CLAIM OF THE ASSESSEE THAT HE HAD AGRICULTURAL INCOME IN THE ASSESSMENT YEAR 1999-00 LD. DR SUBMITTED THAT IT IS NOT KNOWN WHAT HAPPENED BETWEEN 1999-00 TO 2005- 06. WHETHER THE ASSESSEE STILL HAD AGRICULTURAL LAND AND HE WAS CAR RYING ON AGRICULTURAL OPERATIONS IS NOT KNOWN. IN ANY CASE EVIDENCE OF AG RICULTURAL INCOME HAS TO BE SUBMITTED EVERY YEAR INDEPENDENTLY. 6. WE HAVE HEARD PARTIES AND CAREFULLY PERUSED THE MATERIAL OF RECORD. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFEREN CE IN THE ORDER OF LD. CIT(A). THE REASONS ARE THAT IN SPITE OF OPPORTUNIT IES GIVEN TO THE ASSESSEE ITA NO.607/AHD/11 & 866/AHD/09 A.Y. 2005-06 SH. RAMJIBHAI M CHAUDHRY V. ACIT GNG CIR PAGE 4 BOTH AT ASSESSING OFFICERS STAGE AND LD. CIT(A)S STAGE AND DURING HEARING BEFORE US NO EVIDENCE WHATSOEVER IN RESPECT OF DEP OSITS FOUND IN THE CAPITAL ACCOUNT AND CLAIM OF AGRICULTURAL INCOME HAVE BEEN FURNISHED. IF THE ASSESSEE HAD MADE THE CLAIM THAN IT IS FOR HIM TO SUPPORT I T WITH NECESSARY EVIDENCE. EVEN IF IN THE ASSESSMENT YEAR 1999-00 WHICH IS AT LEAST BY FIVE YEARS AWAY ASSESSEE HAD AGRICULTURAL INCOME BUT THAT ITSELF IS NOT SUFFICIENT EVIDENCE THAT IT COULD STILL HAVE AGRICULTURAL INCOME IN THE ASSESSM ENT YEAR 2005-06. EVIDENCE IN SUPPORT OF THE CLAIM HAS TO BE SUBMITTED EVERY Y EAR. PRINCIPLES OF RES JUDICATA PROHIBITS FOLLOWING UP OF A FINDING OF AN EARLIER YEAR IN THE SUBSEQUENT YEAR. THE PRINCIPLE OF CONSISTENCY DEMANDS THAT FAC TS IN EARLIER YEAR SHOULD BE THE SAME AS IN THE CURRENT YEAR. IF THERE IS ANY DE VIATION IN THE FACTS IN THE CURRENT YEAR AS COMPARED TO THE FACTS IN EARLIER YE ARS THEN ASSESSING OFFICER WILL BE FREE TO TAKE AN INDEPENDENT VIEW. THEREFORE THE ASSESSEE HAS OPPORTUNITY TO SHOW THAT FACTS IN EARLIER YEARS WER E ALSO THE SAME AS IN THE CURRENT YEAR IF IT WANTS TO INVOKE THE PRINCIPLES OF CONSISTENCY. THEREFORE MERELY BECAUSE ASSESSEE HAD AGRICULTURAL INCOME IN 1999-00 WOULD NOT AUTOMATICALLY LEAD TO AN INFERENCE THAT HE STILL WO ULD HAVE AGRICULTURAL INCOME IN A.Y. 2005-06. EVIDENCE OF AGRICULTURE HOLDING AN D AGRICULTURAL OPERATIONS AND OF SALE PROCEED OF AGRICULTURAL PRODUCE HAS TO BE SUBMITTED BEFORE ASSESSING OFFICER EVERY YEAR. SIMILARLY DEPOSITS I N CAPITAL ACCOUNT ARE AKIN TO CASH CREDIT. IT IS FOR THE ASSESSEE TO LEAD EVIDENC E ABOUT NATURE AND SOURCE OF DEPOSITS. IF THE ASSESSEE FAILS TO DISCHARGE THE PR IMARY ONUS THE ASSESSING OFFICER WILL BE JUSTIFIED IN MAKING THE ADDITION. S INCE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE IN SPITE OF SEVERAL OPPORTUNIT IES AVAILABLE WE UPHOLD THE ORDER OF LD. CIT(A) AND DISMISS THE APPEAL FILE D BY ASSESSEE. NOW COMING TO ASSESSEES APPEAL IN ITA NO.866/AHD/2 009. 7. THIS APPEAL HAS BEEN FILED BY ASSESSEE RAISING GROUNDS AS UNDER:- 1. THE LD. CIT(A) ERRED ON FACT AND IN LAWS IN NOT ALLOWING THE OPPORTUNITY OF BEING HEARD IN UNAVOIDABLE CIRCUMST ANCES AND SUSTAINED THE PENALTY LEVIED UNDER THE PROVISION OF SECTION 2 71(1)(C) OF THE ACT. ITA NO.607/AHD/11 & 866/AHD/09 A.Y. 2005-06 SH. RAMJIBHAI M CHAUDHRY V. ACIT GNG CIR PAGE 5 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAWS IN SUSTAINING THE PENALTY ORDER WHERE THE APPELLANT HAVE SUFFICIENT EVIDENCES IN REGARD TO ADDITION IN CAPITAL ACCOUNT AND AFTER THE ADDITION ASSESSED INCOME WAS BELOW THE LIMIT HENCE THE SAME MAY DELETED IN TOTO . 8. EARLIER THE TRIBUNAL HAD PASSED AN ORDER IN ITA NO.866/AHD/2011 FOR THE ASSESSMENT YEAR 2005-06 (IN THE SAME CASE FOR T HE SAME ASSESSMENT YEAR AND ON THE SAME GROUNDS) DISMISSED THE APPEAL OF ASSESSEE ON THE GROUND OF NON-PROSECUTION. THIS ORDER WAS PASSED ON 23-07-2009. THEREAFTER ASSESSEE MOVED A MISCELLANEOUS APPLICATION U/S.254( 2) OF THE I..T. ACT REQUESTING THE TRIBUNAL TO RECALL ITS ORDER AS AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE COULD NOT APPEAR ON ACCOUNT OF ILLNESS. TH E TRIBUNAL CONSIDERED THE CASE SYMPATHETICALLY AND RECALLED ITS ORDER VIDE MA NO.326/AHD/2009 ARISING OUT OF ITA NO.866/AHD/2009 VIDE ITS ORDER DATED 08- 01-2010 ACCORDINGLY APPEAL WAS RE-FIXED. 9. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE RECORDS. NO NEW MATERIAL OR ANY FRESH EVIDENCE WAS SUBMITTED BY LD. AUTHORIZED REPRESENTATIVE IN SUPPORT OF ITS CLAIM THAT ASSESSE E HAD IN FACT EARNED AGRICULTURAL INCOME OR HAD GENUINE CASH DEPOSITS. O NCE ASSESSEE HAS FAILED TO DISCHARGE ONUS LYING ON HIM AS PER EXPLANATION-1 TO SECTION 271(1)(C) THE PENALTY WILL HAVE TO LEVIED AS ABOVE ADDITION WOUL D BE DEEMED CONCEALMENT WITHIN THE MEANING OF THAT EXPLANATION. THE TRIBUNA L IN ITS ORDER DATED 23-07- 2009 OBSERVED AS UNDER:- 5. W HAVE HEARD THE LEARNED DR AND GONE THROUGH TH E FACTS OF THE CASE. UNDISPUTEDLY THE ASSESSEE DID NOT FURNISH AN Y EVIDENCE REGARDING SOURCE OF DEPOSIT OF RS.4 14 200/- OR IN RESPECT OF ALLEGED AGRICULTURAL INCOME EVENING RESPONSE TO A SHOW CAUS E NOTICE ISSUED BY THE AO SEEKING EVIDENCE REGARDING THE DEPOSIT OUT OF SALE PROCEEDS OF AGRICULTURAL LAND AND AGRICULTURAL PRODUCE AS CONT ENDED BY THE ASSESSEE. EVEN THE AMOUNT OF RS.2 18 310/- SHOWN AS AGRICULTURAL INCOME WAS NOT SUPPORTED BY ANY EVIDENCE. NO EXPLAN ATION HAS BEEN FURNISHED BEFORE THE AO OR BEFORE THE LEARNED CIT(A ) DURING THE CURSE OF APPELLATE PROCEEDINGS. IN THESE CIRCUMSTANCES E SPECIALLY WHEN NO EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE DURING T HE PENALTY PROCEEDINGS WHILE EXPLANATION GIVEN BY THE ASSESSEE DURING THE ITA NO.607/AHD/11 & 866/AHD/09 A.Y. 2005-06 SH. RAMJIBHAI M CHAUDHRY V. ACIT GNG CIR PAGE 6 ASSESSMENT PROCEEDINGS HAS NOT BEEN SUBSTANTIATED N OR FOUND TO BE BONAFIDE AND THERE IS NO MATERIAL BEFORE US TO TAKE A DIFFERENT VIEW IN THE MATTER WE ARE OF THE OPINION THAT THE LD. CIT( A) WAS JUSTIFIED IN UPHOLDING THE LEVY OF PENALTY ON ACCOUNT OF FURNIS HING OF INACCURATE PARTICULARS OF INCOME OF RS.6 32 510/-. IN TERMS OF PROVISIONS OF SEC. 271(1)(C) OF THE ACT READ WITH EXPLANATION 1 THERET O AND THE JUDICIAL PRONOUNCEMENTS IN THE CASE OF B.A. BALASUBRAMANIAM & BROS. CO. V CIT [1999] 157 CTR 556 (SC) CIT V. B.A. BALASUBRAMANIAM & BROS. [1984] 40 CTR (MAD)/[1985] 152 ITR 529 (MAD). CIT V. MUSSADILAL RAM BHAROSE [1987] 60 CTR (SC)34/[1987] 165 ITR 14 (SC); TC 50R 474; CIT V. K.R. SADAYAPPAN [1990] 86 CTR (SC)120; [1990] 185 ITR 49 (SC) ; TC 50 R 795 ADDL. CIT V. JEEVAN LAL SAH [1994] 117 CTR (SC)130 [1994] 205 ITR 244 (SC); TC 50 R 973 AND K.P. MADHUSUDANAN VS. CIT 251 ITR 99 (SC) IT IS WELL ESTABLISHED THAT WHENEVER THERE IS DIFFERENCE BETWEEN THE RETURNED A ND ASSESSED INCOME THERE IS INFERENCE OF CONCEALMENT. THE EXPL ANTION1 TO SEC. 271(1)(C)(C) OF THE ACT RAISES A PRESUMPTION THAT C AN BE REBUTTED BY THE ASSESSEE WITH REFERENCE TO FACTS OF THE CASE. THUS THE ONUS IS ON THE ASSESSEE TO REBUT THE INFERENCE OF CONCEALMENT. THE ABSENCE OF EXPLANATION ITSELF WOULD ATTRACT PENALTY. THE EXPLA NATION OFFERED BY THE ASSESSEE SHOULD NOT BE FALSE. THE ONUS LAID DOWN UP ON THE ASSESSEE TO REBUT THE PRESUMPTION RAISED UNDER EXPLANATION 1 WO ULD NOT BE DISCHARGED BY ANY FANTASTIC OR FANCIFUL EXPLANATION . IT IS NOT THE LAW THAT ANY AND EVERY EXPLANATION HAS TO BE ACCEPTED WHILE MERE OFFER OF INCOME BY THE ASSESSEE CAN NOT JUSTIFY CANCELLATION OF PENALTY. UNDISPUTEDLY NO EXPLANATION HAS BEEN GIVEN ON ACCO UNT OF DIFFERENCE BETWEEN THE RETURNED AND ASSESSED INCOME AND THUS ONUS LAID DOWN UPON THE ASSESSEE IN TERMS OF EXPLANATION 1(A) TO S EC. 271(1)(C) OF THE ACT REMAINS UNDISCHARGED. EVEN OTHER WISE EXPLANATI ON OF THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS THAT THE AMOUNT O F DEPOSIT OF RS.4 14 200/- WAS OUT OF SALE PROCEEDS OF AGRICULTU RAL LAND AND AGRICULTURAL PRODUCE HAS NOT BEEN SUBSTANTIATED NO R IT WAS BONAFIDE AND THERE IS NO EVIDENCE ON RECORD REGARDING THE AM OUNT OF RS.2 18 310/- HAVING BEEN EARNED OUT OF AGRICULTUR AL ACTIVITIES. IN NUTSHELL IN RELATION TO THE PENALTY NO EXPLANATIO N HAS BEEN FURNISHED BEFORE THE AO OR BEFORE THE LEARNED CIT(A) DURING T HE COURSE OF APPELLATE PROCEEDINGS AS CONCLUDED BY THE LD. CIT( A) WHILE THERE IS NO MATERIAL BEFORE US TO TAKE A CONTRARY VIEW IN THE M ATTER. THUS IT CANNOT BE SAID THAT IN SUCH A CASE THERE COULD BE NO SCOP E FOR SAYING THAT THE ASSESSEE IS GUILTY OF FURNISHING OF INACCURATE PART ICULARS OF INCOME OF RS.6 32 510/- WARRANTING PENALTY UNDER SECTION 271 (1)(C) OF THE ACT. 5.1 HERE WE MAY REFER TO THE DECISION OF THE HONBB LE SUPREME COURT IN THE CASE OF K.P.MADHUSUDANAN VS. CIT 251 ITR 99 (SC) WHEREIN IT WAS HELD THAT ITA NO.607/AHD/11 & 866/AHD/09 A.Y. 2005-06 SH. RAMJIBHAI M CHAUDHRY V. ACIT GNG CIR PAGE 7 WE FIND IT DIFFICULT TO ACCEPT AS CORRECT THE TWO JUDGEMENTS AFOREMENTIONED. THE EXPLANATION TO SECTION 271(1)(C ) IS A PART OF SECTION 271. WHEN THE INCOME-TAX OFFICER OR THE APP ELLATE ASSISTANT COMMISSIONER ISSUES TO AN ASSESSEE A NOTI CE UNDER SECTION 271 HE MAKES THE ASSESSEE AWARE THAT THE P ROVISIONS THEREOF ARE TO BE USED AGAINST HIM. THESE PROVISION S INCLUDE THE EXPLANATION. BY REASON OF THE EXPLANATION WHERE TH E TOTAL INCOME RETURNED BY THE ASSESSEE IS LESS THAN 80 PER CENT O F THE TOTAL INCOME ASSESSED UNDER SECTION 143 OR 144 OR 147 RE DUCED TO THE EXTENT THEREIN PROVIDED THE ASSESSEE IS DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHE D INACCURATE PARTICULARS THEREOF UNLESS HE PROVES THAT THE FAIL URE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR NEGL ECT ON HIS PART. THE ASSESSEE IS THEREFORE BY VIRTUE OF THE NOTICE UNDER SECTION 271 PUT TO NOTICE THAT IF HE DOES NOT PROVE IN THE CIRCUMSTANCES SATED IN THE EXPLANATION THAT HIS FAILURE TO RETUR N HIS CORRECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT HE SHALL BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FUR NISHED INACCURATE PARTICULARS THEREOF AND CONSEQUENTLY B E LIABLE TO THE PENALTY PROVIDED BY THAT SECTION. NO EXPRESS INVOCA TION OF THE EXPLANATION TO SECTION 271 IN THE NOTICE UNDER SECT ION 271 IS IN OUR VIEW NECESSARY BEFORE THE PROVISIONS OF THE EX PLANATION THEREIN ARE APPLIED. THE HIGH COURT AT BOMBAY WAS THEREFORE IN ERROR I THE VIEW THAT IT TOOK AND THE DIVISION BENC H IN THE IMPUGNED JUDGMENT WAS RIGHT. 5.2 MOREOVER IT IS A SETTLED LAW THAT IN ECONOMIC OFFENCES THE STATUTORY LIABILITY TO PAY EITHER DUTY OR TAX IS NOTHING BUT A STRICT LIABILITY WHERE THE QUESTION OF PROVING BEYOND THE SHADOW OF DOUBT ONE S EXISTENCE OF BONA FIDE BELIEF THAT AMOUNT IS NOT TAXABLE DOES NO T ARISE. IT GOES WITHOUT SAYING THAT ANY VIOLATION OF THE LAW OR RUL ES RELATING TO ECONOMIC OFFENCES EITHER RELATING TO THE PAYMENT OF DUTY OR TAX AS THE CASE MAY BE THE THEORY OF MENS REA IS NOT ATTRACTED. IN SUC H MATTERS THE RULES OF INTERPRETATION CONTEMPLATE A STRICT INTERPRETATION RATHER THAN A LIBERAL AND WIDER INTERPRETATION. THE BREACH OF CIVIL OBLIGATIO N WHICH ATTRACTS A PENALTY UNDER THE PROVISIONS OF AN ACT WOULD IMMEDI ATELY ATTRACT THE LEVY OF PENALTY IRRESPECTIVE OF THE FACT WHETHER TH E CONTRAVENTION WAS MADE BY THE DEFAULTER WITH ANY GUILTY INTENTION OR NOT VIDE CHAIRMANA SEBI V. SHRIRAM MUTUAL FUND [2006] 131 COMP CASES 591 (SC); [2006] 5 SCC 361. THIS VIEW HAS BEEN REITERATED BY THE HONBLE SUPREME COURT IN THEIR DECISION DATED 29.9.2008 IN THE CASE OF UNION OF INDIA AND OTHERS VS. DHARMENDRA TEXTILE PROCESSO RS AND OTHERS IN CIVIL APPEAL NOS. 10289-10303 OF 2003 NOW REPOR TED IN 306 ITR 227 (SC) ITA NO.607/AHD/11 & 866/AHD/09 A.Y. 2005-06 SH. RAMJIBHAI M CHAUDHRY V. ACIT GNG CIR PAGE 8 5.3 HONBE ALLAHABAD HIGH COURT HELD IN THE CASE OF SANGAM ENTERPRISES VS CIT 288 ITR 396 (ALL) THAT HAVING GIVEN OUR ANXIOUS CONSIDERATION TO THE CONT ENTION RAISED BY SHRI MAHAJAN WE FIND THAT AFTER THE INSERTION O F EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT BY THE TAXATION LAW S (AMENDMENT) ACT 1975 IF THE EXPLANATION OFFERED BY THE ASSESS EE REGARDING THE ADDITIONS IS EITHER FOUND TO BE FALSE AND REMAI NED UNSUBSTANTIATED THE ADDITIONS SO MADE ARE DEEMED T O BE THE CONCEALED INCOME AND THEREFORE THE PENALTY PROVIS IONS ARE ATTRACTED. THE DECISION RELIED UPON BY THE TRIBUNAL RELATES TO THE ASSESSMENT YEARS PRIOR TO APRIL 1 1976 WHEN THE P RESENT EXPLANATION WAS NOT IN THE STATUTE BOOK AND THERE FORE THEY ARE NOT APPLICABLE IN THE PRESENT CASE. WE ARE THEREFOR E OF THE CONSIDERED OPINION THAT THE TRIBUNAL HAS COMPLETELY MISDIRECTED ITSELF IN CANCELING THE PENALTY. 5.4 IN THE CASE UNDER CONSIDERATION THE ASSESSEE HA S FAILED TO DISCHARGE A VERY HEAVY ONUS PLACED ON HIM IN TERMS OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT. IN THE CASE OF CIT V. PRATHI HARDWARE STORES [1993] 203 ITR 641 (ORI.). HONBLE ORISSA HIGH COURT HAVE LAID DOWN T HE FOLLOWING PROPOSITION OF LAW: I) EXPLANATION TO SECTION 271(1)(C) IS THE RULE OF EVIDENCE. II) THE INITIAL BURDEN OF REBUTTAL IS ON THE ASSESS EE BECAUSE THE BASIC FACTS ARE WITHIN THE SPECIAL ACKNOWLEDGE OF THE ASSESSEE. SECTION 106 OF THE INDIA EVIDENCE ACT 18 72 GIVES STATUTORY RECOGNITION TO THIS UNIVERSALLY ACC EPTED RULE OF EVIDENCE. III) THERE IS NO DISCRETION ON THE ASSESSING OFFICE R AS TO WHETHER HE CAN INVOKE THE EXPLANATION OR NOT. 5.5 IN THE CASE OF USHA FERTILISERS VS. CIT 269 ITR 591 (GUJ) WHILE UPHOLDING THE LEVY OF PENALTY HONBLE JURISDICTION AL HIGH COURT OBSERVED THAT THE SUPREME COURT IN THE CASE OF MUSSADILAL RA M BHAROSE [1987] 166 ITR 14 HAS SPECIFICALLY LAID DOWN THE SCOPE OF THE EXPLANATION IN THE FOLLOWING WORDS: THE POSITION THEREFORE IN LAW IS CLEAR. IF THE R ETURNED INCOME IS LESS THAN 80 PER CENT OF THE ASSESSED IN COME THE PRESUMPTION IS RAISED AGAINST THE ASSESSEE THAT THE ASSESSEE IS GUILTY OF FRAUD OR GROSS OR WILLFUL NEG LECT AS A RESULT OF WHICH HE HAS CONCEALED THE INCOME BUT THI S ITA NO.607/AHD/11 & 866/AHD/09 A.Y. 2005-06 SH. RAMJIBHAI M CHAUDHRY V. ACIT GNG CIR PAGE 9 PRESUMPTION CAN BE REBUTTED. THE REBUTTAL MUST BE O N MATERIALS RELEVANT AND COGENT. AS TO WHAT COULD BE THE EXPLANATION BY WHICH THE AS SESSEE CAN REBUT THE PRESUMPTION RAISED AGAINST IT IS STATED BY THE APEX COURT IN THE SAME DECISION I THE FOLLOWING WORDS WH ILE CONFIRMING THE VIEW EXPRESSED BY THE FULL BENCH OF THE PATNA H IGH COURT IN THE CASE OF CIT V. NATHULAL AGARWALA AND SONS [1985] 153 ITR 292: THE PATNA HIGH COURT EMPHASIZED THAT AS TO THE NAT URE OF THE EXPLANATION TO BE RENDERED BY THE ASSESSEE IT WAS PLAIN ON PRINCIPLE THAT IT WAS NOT THE LAW THAT THE MOMENT ANY FANTASTIC OR UNACCEPTABLE EXPLANATION WAS GIVEN THE BURDEN PLACED UPON HIM WOULD BE DISCHARGED AND THE PRESUMPTION REBUTTED. WE AGREE. WE FURTHER AGREE TH AT IT IS NOT THE LAW THAT ANY AND EVERY EXPLANATION BY THE A SSESSEE MUST BE ACCEPTED. IT MUST BE AN ACCEPTABLE EXPLANAT ION ACCEPTABLE TO A FACT-FINDING BODY. WE ARE AWARE THAT IT WOULD NOT BE POSSIBLE FOR THE HIGH COURT TO ENTER INTO A FACT-FINDING EXERCISE OR REAP PRECIATE THE EVIDENCE AND WE DO NOT PROPOSE TO DO SO. HOWEVE R AT THE SAME TIME IT IS APPARENT THAT THE BURDEN WHICH IS CAST ON THE ASSESSEE REMAINS UNDISCHARGED WHEN NONE APPL IES THE PRINCIPLES LAID DOWN BY THE APEX COURT. AS OBSE RVED THE EXPLANATION HAS TO BE ONE WHICH IS NOT FANTASTIC OR UNACCEPTABLE. IT IS NOT THE LAW THAT ANY AND EVERY EXPLANATION BY THE ASSESSEE MUST BE ACCEPTED 5.6 IN THE CASE UNDER CONSIDERATION NO EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE DURING THE PENALTY PROCEEDINGS EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A) WHILE THE EXPLANATION GIVEN B Y THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS NOT BEEN SUBSTANTIAT ED NOR FOUND TO BE BONAFIDE AND THERE IS NO MATERIAL BEFORE US TO T AKE A DIFFERENT VIEW IN THE MATTER. MOREOVER THE ONUS PLACED UPON THE ASSE SSEE TO EXPLAIN THE DIFFERENCE IN THE RETUNED INCOME AND FINALLY ASSESS ED INCOME HAS NOT BEEN DISCHARGED AND UNDISPUTEDLY NO EXPLANATION HAS BEEN GIVEN FOR THIS DIFFERENCE. THEREFORE IN TERMS OF EXPLANATION 1 TO SEC. 271(1)(C) THE AMOUNT ADDED IN COMPUTING THE TOTAL INCOME IS DEEME D TO REPRESENT INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CO NCEALED. 6. IN THE LIGHT OF THE DISCUSSION MADE ABOVE AND IN VIEW OF AFORESAID DECISIONS OF HON;BE SUPREME COURT AND JURISDICTIONA L HIGH COURT WE ARE OF THE OPINION THAT THE ASSESSEE HAS NOT BEEN A BLE TO DISCHARGE THE BURDEN THAT LAY UPON IT BY EXPLANATION 1 TO S. 271( 1)(C) OF THE ACT. WE ITA NO.607/AHD/11 & 866/AHD/09 A.Y. 2005-06 SH. RAMJIBHAI M CHAUDHRY V. ACIT GNG CIR PAGE 10 THEREFORE HAVE NO HESITATION IN UPHOLDING THE ORDE R OF THE LD. CIT(A) IN CONFIRMING THE PENALTY IN RELATION TO THE AFORESAID AMOUNT OF RS.6 32 510/-. THEREFORE GROUND NOS. 1 & 2 OF THE A PPEAL ARE DISMISSED. SINCE LEGAL ASPECT OF THE MATTER HAS BEEN DISCUSSED BY TRIBUNAL EARLIER THE SAME STILL HOLD GOOD EVEN AFTER THE HEARING THE ASS ESSEE AS THERE IS NO MATERIAL CHANGE SO FAR AS FACTS ARE CONCERNED. UNLE SS DIFFERENT SET OF FACTS ARE BROUGHT ON RECORD WHICH ARE NOT AVAILABLE AT THE TI ME WHEN TRIBUNAL HAD PASSED ORDER DATED 23-07-2009 NO DIFFERENT VIEW CAN BE TAKEN SO FAR AS LAW POINTS ARE CONCERNED. THUS EVEN AFTER HEARING NO N EW FACTS HAVE COME ON RECORD WE FOLLOW THE VIEW TAKEN BY TRIBUNAL IN THAT ORDER AS THEY ARE PURELY LEGAL. ACCORDINGLY AS PER LEGAL POSITION STATED AB OVE WE DISMISS THE APPEAL FILED BY ASSESSEE. 10. IN THE RESULT BOTH APPEAL OF ASSESSEE ARE DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON 31/03/2011 SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD DATED : 31/03/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-GNR 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD