Bombay High Court
Prabhakar Bhaiyaji Ghode vs Cit on 17 April, 2007
Author: J Devadhar
Bench: J Devadhar, B Dharmadhikari
JUDGMENT
J.P. Devadhar, J.
1. Heard learned Counsel for the respective parties.
2. The issues raised in both these applications are common and, therefore, the same are heard together and disposed of by a common order.
3. I. T. A. No. 17 of 1995 is filed by the assessee against the order of the Tribunal relating to the quantum addition sustained by the Tribunal. I. T. A. No. 84 of 1995 is filed by the revenue against the order of the Tribunal deleting the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961.
4. The assessee is an individual carrying on business in money-lending and purchase and sale of silver and silver ornaments. According to the assessee, on. August 19, 1988, some persons approached him at his shop and offered some gold and golden ornaments for sale. The deal was settled for Rs. 3 lakhs and the assessee was to collect the gold and g;old ornaments for exchange of the sum of Rs. 3 lakhs at the Government rest house at Katol. As the assessee was proceeding towards the Government rest house with the cash amount: of Rs. 3 lakhs someone had snatched away his bag containing the money and, therefore, he had lodged a police complaint.
During the course of assessment, the assessing officer sought explanation regarding source of acquiring the amount of Rs. 3 lakhs which was the subject-matter of the police complaint. The assessee explained that out of the sum of Rs. 3 lakhs, Rs. 2.50 lakhs was received from his two sons and the remaining amount of Rs. 50,000 was his own savings from agricultural income. The assessing officer rejected the explanation and added the tax on the entire amount of Rs. 3 lakhs and also levied a penalty under Section 271(1)(c) of the Act.
5. Being aggrieved by the aforesaid order, the assessee filed an appeal before the Commissioner (Appeals) who uphold the addition as also the penalty. Being aggrieved by the said order, the assessee filed further appeal before the Income Tax Appellate Tribunal and the Tribunal, while upholding the quantum addition, deleted the penalty levied under Section 271(1) (c) of the Act. Since the reference applications filed under Section 256(1) of the Act by the assessee as well as the revenue have been rejected, the present applications under Section 256(2) of the Act have been filed.
6. Learned Counsel for the assessee relying upon the judgments of the apex court in the case of Dr. T. A. Quereshi v. CIT ; (2007) 2 SCC 759 and CIT v. Piara Singh reported in (1980) 124 ITR 40 submitted that the Tribunal was not justified in sustaining the quantum addition and in any event the Tribunal ought to have allowed the said amount as business expenditure.
7. Similarly, learned Counsel for the revenue submitted that, in the facts of the present case, as the assessee failed to establish the source of income, the Tribunal was not justified in deleting the penalty under Section 271(1)(c) of the Act.
8. In our opinion, the aforesaid arguments of both counsel deserve consideration. Thus, the order passed by the Tribunal gives rise to the question of law. Accordingly we allow both applications. In I. T. A. No. 17 of 1995, the Tribunal is directed to forward the statement of the case on the following questions of law:
(1) Whether the Tribunal was correct in holding that the assessee was the owner of the entire sum of Rs. 3 lakhs in spite of the fact that the assessee had adduced evidence to the contrary in respect of a sum of Rs. 2.5 lakhs and thus discharged the burden of proof laid on him under Section 110 of the Indian Evidence Act, 1872 ?
(2) Whether the Tribunal was correct in holding that the loss of Rs. 3 lakhs was not incurred in the course of the business of the assessee only on the grounds that the assessee did not carry on business in gold ornaments and disallowing the claim of the assessee in spite of the Supreme Court's decision in CIT v. Piara Singh .
9. In I. T. A. No. 84 of 1995 the Tribunal is directed to forward the statement of the case on the following questions of law:
(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the penalty of Rs. 1,75,000 imposed for concealment was such that it needed to be cancelled ?
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that Explanation 1 to Section 271(1)(c) of the Act does not apply to the facts of this case even though the explanation given by the assessee was found to be false by the assessing officer ?
Whether, on the facts and jn the circumstances of the case, the Tribunal was justified in law in holding that the department has not discharged its onus of proving the concealment of income or furnishing of inaccurate particulars of income by the assessee ?
10. Both applications are disposed of accordingly.
11. Rule is made absolute. No order as to costs.
