Shri Hirabhai Samjibhai Patel(HUF), Surat V. The ACIT.,Circle-9, Surat

ITA 3501/AHD/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0214 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-05-2009
• Assessment Year: 1999-2000
• Appeal Filed On: 22-10-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C
• Assessee Lawyers: ASHWIN PAREKH
• Keywords: Income from undisclosed sources; Block assessment; Onus to prove
• Section: 271(1)(c); 143(3); 274; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI P.K.BANSAL, ACCOUNTANT MEMBER DATE OF HEARING : 7.08.09 DRAFTED ON: 29.09.09 ITA NO.3501/AHD/2008 ASSESSMENT YEAR : 1999-00, & ITA NO.3502/AHD/2008 ASSESSMENT YEAR : 2000-01, SHRI HIRABHAI SAMJIBHAI PATEL (HUF) 27, NILKAMAL PARK SOCIETY, VARACHHA ROAD, SURAT. VS. ACIT, CIRCLE-9, AAYKAR BHAVAN, MAJURA GATE, SURAT. PAN/GIR NO. : AAAHH8648M (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI ASHWIN PAREKH RESPONDENT BY: SHRI M.C.PANDIT SR. D. R. O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER :- THESE TWO APPEALS OF THE ASSESSEE ARE ARISING OUT OF THE COMMON ORDERS OF CIT(APPEALS)-V, SURAT, IN APPEAL NOS.CAS- V/177-178/07-08 DATED 14.08.2008. THE ASSESSMENTS WERE FRAMED BY T HE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, SURAT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT) FOR THE ASSESSMENT YEARS 1999-2000 AND 2000-2001 VIDE ORDER S DATED 26.02.2002 AND 25.02.2003. THE IMPUGNED PENALTIES W ERE LEVIED BY THE ACIT, CIRCLE-9, SURAT UNDER SECTION 271(1)(C) OF TH E ACT VIDE ORDERS DATED 17.10.2007 AND 25.10.2007. ITA NO.3501 & 3502 /AHD/2008 M/S. HIRABHAI SAMJIBHAI PATEL HUF ASST.YEAR -1999-00 & 2000-01 - 2 - 2. THE ONLY ISSUE IN BOTH THE APPEALS OF THE ASSESS EE IS AGAINST THE ORDER OF THE ITA CONFIRMING LEVY OF PENALTY. FOR TH IS, THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GROUNDS:- A.Y. 1999-00 THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AN D ON FACTS IN CONFIRMING PENALTY U/S. 271(1)(C) OF THE ACT AT RS.1,06,703/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME WITHOUT APPRECIATING THE FACT S THAT RETURN INCOME OF CERTAIN PERSONS WERE CLUBBED & CONFIRMED BY ITAT ON TECHNICAL GROUNDS WHICH INFACT DID NOT GENERATE ANY FUND TO APPELLANT . THE PENALTY OF RS.1,06,703/- BE DELETED. A.Y.2000-01 THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AN D ON FACTS IN CONFIRMING PENALTY U/S. 271(1)(C) OF THE ACT AT RS.1,15,678/- FOR FURNISHING INACCURATE PARTICULARS OF INCOME WITHOUT APPRECIATING THE FACT S THAT RETURN INCOME OF CERTAIN PERSONS WERE CLUBBED & CONFIRMED BY ITAT ON TECHNICAL GROUNDS WHICH INFACT DID NOT GENERATE ANY FUND TO APPELLANT . THE PENALTY OF RS.1,15,678/- BE DELETED. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUES ARE THAT IN BOTH THE APPEALS, THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN T HE BUSINESS OF WEAVING ART SILK CLOTH ON POWER LOOMS. DURING THE C OURSE OF SEARCH PROCEEDINGS CARRIED OUT ON THE BUSINESS PREMISES OF THE ASSESSEE ON 16.04.1998, THE STATEMENT OF CERTAIN EMPLOYEES RUNN ING UNITS IN ONE BUILDING WERE RECORDED, WHEREBY IT WAS ADMITTED BY THEM, THAT THESE ARE BENAMI CONCERNS. THE ASSESSEE IS A PARTNER OF RAGHU VIR GROUP, WHICH CONSIST MORE THAN 60 CONCERNS. DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS, UNACCOUNTED INCOME GENERATED FROM THE FACTORY PREMISES WAS CONSIDERED IN THE HANDS OF THE ASSESSEE AFTER T HE YEAR UNDER CONSIDERATION WAS RECORDED AND CONSIDERED IN THE BL OCK ASSESSMENT. THE ASSESSING OFFICER ALSO NOTED THAT VARIOUS PROPRIETA RY CONCERNS WERE RUNNING FROM THE SAME BUSINESS PREMISES AND DURING THE COURSE OF SEARCH, THE ASSESSEE FAILED TO IDENTIFY THE STOCK OF THE RE SPECTIVE CONCERNS, WHICH ITA NO.3501 & 3502 /AHD/2008 M/S. HIRABHAI SAMJIBHAI PATEL HUF ASST.YEAR -1999-00 & 2000-01 - 3 - WERE RUN IN THE NAMES OF EMPLOYEES OF THE SAME GROU P. THE ASSESSEE ALSO ARRANGED LOANS IN THE EMPLOYEES NAME AND LOOM S WERE ERECTED IN THE PREMISES OF THE ASSESSEE. THE ASSESSING OFFICER RECORDED THE STATEMENT FOLLOWING EMPLOYEES UNDER SECTION 131 OF THE ACT. SR. NO. NAME OF THE ASSESSEE DATE OF STATEMENT 1. VALJIBHAI JADAVBHAI 14/02/2001 2. RAMESHBHAI LAXMANBHAI 09/02/2001 3. LABHUBHAI LAMANBHAI PATEL 14/02/2001 4. LILLIBEN NARANBHAI 14/02/2001 5. GITABEN ASHOKBHAI VAGHASIA 09/02/2001 6. SUNITABEN BABUBHAI 09/02/2001 THE ASSESSING OFFICER NOTED THAT ALL THESE EMPLOYEE S ARE RECEIVING SALARY FROM THE ASSESSEE AND ON THE SAME BASIS, THE SHOW C AUSE NOTICE NO.DCIT/CC-1/HRSP/2001-02, DATED 01.02.2002 WAS ISS UED. THE ASSESSEE ADMITTED IN HIS REPLY AND REQUESTED FOR RE DUCTION OF SALARY FROM THE ADDITION. THE ASSESSEE REPLIED VIDE REPLY DATED 7.02.2002 AND RELEVANT PARA. 2 OF THE REPLY READS AS UNDER:- EVEN IF, IT IS ASSUMED THAT THE ABOVE PERSONS MENT IONED IN THE NOTICE ARE EMPLOYEES AND WERE THE PAID THE SALARY OF RS.2,34,0 00/- NO ADDITION FOR SALARY CAN BE MADE. WHILE MAKING THE BLOCK ASSESSME NT THE DEDUCTION FOR UNACCOUNTED EXPENSES WERE GIVEN FROM UNACCOUNTED SA LES. IF, THE UNACCOUNTED SALARY OF RS.2,34,000/- IS ASSUMED TO H AVE BEEN PAID IT IS REQUIRED TO BE REDUCED FROM THE UNDISCLOSED INCOME OF THE BLOCK PERIOD BECAUSE THIS AMOUNT WAS NOT DEDUCTED FROM UNACCOUNT ED SALES WHILE DETERMINING UNDISCLOSED PROFIT OF REGHUNANDAN AS PE R UNACCOUNTED P&L PREPARED IN BLOCK ASSESSMENT ORDER. THEREFORE, INST EAD OF MAKING THAT ADDITION OF RS.2,34,000/- IN REGULAR ASSESSMENT, IT IS REQUIRED TO REDUCED FROM UNDISCLOSED INCOME DETERMINED IN BLOCK ASSESSM ENT ORDER. THE ALLEGED SALARY AGAIN, CANNOT BE ADDED BECAUSE T HE PROFIT OF RS.3,61,441/- PERSONS AS PER THE RETURNED INCOME OF THE ALLEGED EMPLOYEES WERE CREDITED IN THEIR BANK ACCOUNTS. IT, THE PERSONS ARE ACTUALLY EMPLOYEES AS ASSUMED BY YOUR HONOUR THEY W OULD RETURN THE PROFIT OF RS.3,61,441/- SHOWN IN THEIR NAME IN THEI R RETURNS BECAUSE ITA NO.3501 & 3502 /AHD/2008 M/S. HIRABHAI SAMJIBHAI PATEL HUF ASST.YEAR -1999-00 & 2000-01 - 4 - EMPLOYEES ARE NOT ENTITLED NEVER ALLOWED TO TAKE AW AY THAT PROFIT. OUT OF THE RETURNED AMOUNT OF RS.3,61,441/- BY THE ALLEGE D EMPLOYEES TO THE ASSESSEE THE SALARY IS PAID. THEREFORE, THE SALARY OF RS.2,34,000/- IS PAID OUT OF RS.3,61,441/- BEING THE PROFIT OF THE EMPLOY EES AND RETURNED BY THEM TO THE ASSESSEE. THEREFORE, INSTEAD OF MAKING THE ADDITION OF RS.3,61,441/- FOR RETURNED INCOME OF EMPLOYEES AND RS.2,34,000/- FOR PAYMENT OF SALARY THE ACTUAL ADDITION TO BE MADE CO MES TO RS.1,27,441/- (3,61,441-234,000) BECAUSE THE EMPLOYEES ARE ENTITL ED TO WAGES OR SALARY OUT OF THE PROFIT OF THEIR RESPECTIVE UNIT. THE PRO FIT OF THE UNITS TO BE CLUBBED IS RS.3,61,441/- OUT OF WHICH EMPLOYEES ENTITLEMENT OF SALARY IS RS.2,34,000/- HENCE, THE NET GAIN TO THE ASSESSEE I S RS.1,27,441/- WHICH CAN BE ASSUMED TO HAVE BEEN DIVERTED BY FILING THE RETURNS IN THE NAMES OF EMPLOYEES IF THE PERSONS RUNNING UNITS ARE ASSUM ED AS EMPLOYEES BY YOUR HONOUR. 4. THE ASSESSING OFFICER HAS NOT ACCEPTED THE REPLY OF THE ASSESSEE AND MADE ADDITION BY GIVING SEPARATE REASONS THAT T HE EMPLOYEES CLEARLY ADMITTED THAT THEY HAVE NOT DONE ANY BUSINESS AND E NTIRE BUSINESS TRANSACTION AS REFLECTED IN THE RETURN OF INCOME WA S CARRIED OUT BY THE ASSESSEE AND THESE EMPLOYEES HAD ONLY SINGED THE RE TURNS OF INCOME AT THE INSTANT OF THE ASSESSEE. HE CLEARLY ADMITTED TH AT THEY DID NOT KNOW THE BANK ACCOUNTS, PURCHASE, SALES, POSITION OF STOCK E TC. THEY HAD ALSO EXPRESSED IGNORANCE ABOUT TERMS OF USAGE OF FACTORY PREMISES AND DETAILS OF LOANS TAKEN FOR THE PLANT AND MACHINERY. ACCOR DINGLY, ASSESSING OFFICER HAS CLUBBED THE INCOME DECLARED IN THE HAND S OF THE ASSESSEE AND ADDITION OF RS.5,95,441/- WAS MADE. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER TREAT ING THE BENAMI CONCERNS IN THE NAMES OF SALARIED EMPLOYEES THAT OF THE ASS ESSEE. AGGRIEVED, THE ASSESSEE FURTHER CARRIED THE MATTER TO THE TRIBUNAL AND THE TRIBUNAL FINALLY CONFIRMED THE ACTION OF THE LOWER AUTHORITIES. AT T HE TIME OF HEARING, BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE ADMITTED THAT THE ADDITION AS HAS ITA NO.3501 & 3502 /AHD/2008 M/S. HIRABHAI SAMJIBHAI PATEL HUF ASST.YEAR -1999-00 & 2000-01 - 5 - BEEN MADE ARE ACCEPTED AS IT IS AND NO FURTHER APPE AL HAS BEEN CARRIED BEFORE THE HON'BLE HIGH COURT BY THE ASSESSEE. THE ASSESSING OFFICER STARTED PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT IN RESPECT OF THE INCOME ADDED ON ACCOUNT OF BENAMI CONCERNS RUN IN THE NAME OF CERTAIN EMPLOYEES BY ASSESSEE IN THE SAME BUILDING AND IN THE SAME BUSINESS PREMISES. THE ASSESSING OFFICER IN HIS PE NALTY ORDER NOTED THAT THE ASSESSEE IS A PARTNER OF RAGHUVIR GROUP OF CASE S AND DURING THE COURSE OF SEARCH UNDER SECTION 132 OF THE ACT CARRI ED OUT ON 16.04.1998, AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESS EE AND ON FURTHER VERIFICATION, IT WAS NOTICED THAT SOME OF THE PROPR IETARY CONCERNS ARE BEING RUN IN THE NAME OF THE EMPLOYEES OF THE ASSESSEE, A ND LOOMS WERE ERECTED IN THE BUSINESS PREMISES IN THEIR NAMES. IT WAS ALSO NOTED BY THE ASSESSING OFFICER THAT THE EMPLOYEES ARE GETTING SA LARY FROM THE ASSESSEE AND INCOME TAX FILES WERE CREATED BY THE ASSESSEE I N THE NAMES OF THESE PERSONS AS PROPRIETOR OF THE VARIOUS CONCERNS JUST TO DIVERT THE PROFITS. 6. THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE F OR LEVY OF PENALTY AND IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE FILED THE GENERAL EXPLANATION THAT THE LOOMS WERE IN THE NAME OF THE RESPECTIVE EMPLOYEES AND THE ASSESSEE AS WELL AS EMPLOYEES FILED THEIR R ETURNS OF INCOME AND THERE WAS NO DELIBERATE OR CONSCIOUS ACT OF CONCEAL MENT. ACCORDING TO THE ASSESSEE, THE ASSESSING OFFICER IS REQUIRED TO ARRI VE AT THE SATISFACTION AS TO HOW THE PRIMARY EVIDENCE ESTABLISHES THAT THE AS SESSEE HAS CONCEALED THE AMOUNT OR FURNISHED INACCURATE PARTICULARS OF H IS INCOME AND ONUS HAS TO BE DISCHARGED BY THE DEPARTMENT. ACCORDING TO TH E ASSESSEE, THE ASSESSING OFFICER SHOULD NOT BE GIVEN THE PRESUMPTI ON THAT THERE IS GUILT ON THE PART OF THE ASSESSEE. ACCORDINGLY TO HIM, THE L EVY OF PENALTY IS QUASI CRIMINAL IN NATURE AND THUS, THE BURDEN LIES ON THE DEPARTMENT TO ESTABLISH THAT ASSESSEE HAS CONCEALED HIS INCOME OR FURNISHED INACCURATE ITA NO.3501 & 3502 /AHD/2008 M/S. HIRABHAI SAMJIBHAI PATEL HUF ASST.YEAR -1999-00 & 2000-01 - 6 - PARTICULARS OF INCOME. ACCORDING TO HIM, THE FINDIN GS GIVEN IN THE ASSESSMENT ORDER SHOULD NOT AUTOMATICALLY BE ADMITT ED, EVEN THOUGH, THE SAME CONSTITUTES GOOD EVIDENCE IN PENALTY PROCEEDIN GS. THE MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE THE DEL IBERATE ACT OF SUPPRESSION AND THEREFORE, THE ASSESSING OFFICER SH OULD NOT IMPOSE THE PENALTY. THE ASSESSING OFFICER WAS NOT CONVINCED AS THE ASSESSEE HAS NOT FILED ANY EXPLANATION TO SUBSTANTIATE AS TO WHY THE ASSESSEE HAS CREATED VARIOUS BENAMI CONCERNS IN THE NAME OF THE EMPLOYEE S AND NOT DECLARED THE PROFIT IN HIS RETURN OF INCOME AS AGAINST THE P ROFITS WERE DIVERTED IN THE NAMES OF THE VARIOUS EMPLOYEES AS MENTIONED ABOVE. THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION WITH RESPECT TO BANAMI CONCERNS AND WHY THESE WERE CREATED IN THE NAME OF THE EMPLOYEES AND DIVERTED THE PROFIT. THE ASSESSING OFFICER LEVIED THE PENALTY UNDER SECT ION 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PARTICULARS OF HIS INCOME FOR BOTH THE YEARS. 7. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY ST ATING THAT ASSESSEE HAS NOT FILED ANY EXPLANATION, ON MERITS, THE COMMISSIO NER OF INCOME TAX (APPEALS) STATED AS UNDER: IN THIS CASE, IT CLEARLY EXISTS AS A PLAIN READING OF PENALTY ORDER SUGGESTS. IN THE INSTANT CASE THE APPELLANT WHILE SIGNING THE VE RIFICATION TO ITS RETURN OF INCOME KNEW FULLY WELL THAT CERTAIN PAID EMPLOYEES WHO WERE BENAMIS OF THE APPELLANT WERE EARNING APPELLANTS INCOME WHICH WER E BEING RETURNED IN THEIR HANDS. THE APPELLANT ALSO KNEW THAT THE LOOMS STAND ING IN THE NAMES OF THESE EMPLOYEES IN REALITY BELONGED TO THE APPELLAN T HIMSELF. YET IT DELIBERATELY CHOSE TO FURNISH INACCURATE PARTICULAR S. IT WAS ONLY DURING THE INQUIRY, INVESTIGATION THAT THE TRUTH CAME OUT WHIL E RECORDING THE STATEMENTS OF THOSE EMPLOYEES. HENCE, IT WAS NOT ONLY A CASE W HERE INACCURATE PARTICULARS OF INCOME WERE FURNISHED, IT IS ALSO TH AT APPELLANTS INCOME WAS SOUGHT TO BE CONCEALED BY CLAIMING THE SAME IN NUME ROUS EMPLOYEES HANDS. INFLATED AND FRAUDULENT DEDUCTIONS WERE CLAI MED BY THESE EMPLOYEES. THE APPELLANT ALSO MANAGED IN REDUCE IT OWN TAX LIA BILITY. THE APPELLANT ONLY IS THE DIRECT AND STRAIGHT BENEFICIARY OF THIS FRAU D. THESE FACTS ARE TOO STARK TO ITA NO.3501 & 3502 /AHD/2008 M/S. HIRABHAI SAMJIBHAI PATEL HUF ASST.YEAR -1999-00 & 2000-01 - 7 - BE IGNORED AND HENCE THE ASSESSING OFFICER WAS FULL Y SATISFIED ABOUT THE APPELLANT HAVING FURNISHED INACCURATE PARTICULARS O F INCOME. PARTICULARS OF INCOME WOULD MEAN THE SOURCE THE NATURE, QUANTUM AND ACTUAL OWNERSHIP OF SUCH PROFITS. THE APPELLANT KNEW ALL THESE AND D ELIBERATELY CHOSE TO FURNISH INACCURATE ONE. THE MOTIVE APPARENTLY IS TO REDUCE ITS OWN INCOME. BY STRETCH OF IMAGINATION OR LOGIC THIS CANNOT BE T ERMED OMISSION OR NEGLIGENCE. IT IS QUITE WILLFUL AND HAS A CLANDESTI NE ELEMENT TO IT. THEREFORE, APPELLANTS ARGUMENT IN PARA 2 OF HIS WRITTEN SUB MISSION CARRIES NO MERIT. 8. AGGRIEVED, IN BOTH THE YEARS, ASSESSEE CAME IN S ECOND APPEAL BEFORE US. BEFORE US, LEARNED COUNSEL FOR THE ASSES SEE REITERATED THE SAME SUBMISSION AS MADE BEFORE THE LOWER AUTHORITIES. ON THE OTHER HAND, LEARNED COUNSEL FOR DEPARTMENTAL REPRESENTATIVE HEA VILY RELIED THE ORDERS OF THE LOWER AUTHORITIES. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE CASE RECORDS AS WELL AS THE ARGUMENTS OF BOTH THE SIDES, THAT THE ASSESSEE HAS NOT FILED ANY EXPLANATION, NEITHER BEFORE THE ASSESSING OFFICER N OR BEFORE CIT(A), THAT WHY HE HAS CREATED VARIOUS ENTITIES IN THE NAMES OF VARIOUS EMPLOYEES AS MENTIONED ABOVE AND ALSO ERECTED LOOMS IN THEIR NAM ES IN THE SAME PREMISES. IT IS ADMITTED POSITION THAT THERE WERE V ARIOUS PROPRIETARY CONCERNS WHICH WERE BEING RUN IN THE NAME OF VARIOU S EMPLOYEES OF THE ASSESSEE GROUP AND EVEN THE LOOMS WERE ARRANGED IN THEIR NAMES AND LOOMS WERE ERECTED IN THEIR NAME IN THE SAME BUSINE SS PREMISES BY THE ASSESSEE. THE ASSESSEE HAS NOT SUBMITTED ANY EXPLA NATION WHY HE HAS CREATED VARIOUS ENTITIES AND ALSO OBTAINED LOAN IN THE NAMES OF EMPLOYEES FOR ERECTION OF LOOMS. THIS IS TOTALLY A ARRANGED A FFAIR JUST TO DIVERT THE PROFIT TO EVADE TAX. IT SEEMS THAT THE ASSESSEE COULD NOT EXPLAINED ANYTHING AND IN THE ABSENCE OF ANY EXPLANATION, WHETHER THE PENA LTY CAN BE DELETED OR NOT. ITA NO.3501 & 3502 /AHD/2008 M/S. HIRABHAI SAMJIBHAI PATEL HUF ASST.YEAR -1999-00 & 2000-01 - 8 - 10. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE HA S NOT FILED ANY EXPLANATION WHATSOEVER AND ONLY SUBMISSIONS WAS MAD E THAT THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULA RS OF INCOME AND CONCEALED THE INCOME AND MERELY DISBELIEVING OF THE EXPLANATION DOES NOT AMOUNT TO CONCEALMENT. WE FAILED TO UNDERSTAND, AS WHERE IS THE EXPLANATION OF THE ASSESSEE, WHATSOEVER. WE FIND TH AT THERE IS NONE EXPLANATION BY THE ASSESSEE. ACCORDINGLY, TO FIND O UT, IN CASE, THERE IS NO EXPLANATION BY THE ASSESSEE WHAT WILL HAPPEN AND IN THAT CASE, EXPLANATION- 1 TO SECTION OF 271(1) OF THE ACT WILL APPLY OR NO T. NOW WE HAVE TO GO TO THE RELEVANT EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT. THE RELEVANT EXPLANATION READS AS UNDER:- EXPLANATION 1. WHERE IN RESPECT OF ANY FACTS MA TERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT,- (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OFFICER OR THE [C OMMISSIONER (APPEALS] [OR THE COMMISSIONER] TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMP UTATION OF HIS TOTAL INCOME HAVE BEEN DISCLOSED BY HIM] THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHALL, FOR THE PURP OSES OF CLAUSE OF THIS SUB-SECTION BE DEEMED TO REPRESENT THE INCOME IN RE SPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN VIEW OF THE ABOVE EXPLANATION-1 TO SECTION 271(1 )(C) OF THE ACT, THE ONLY THING WHICH THE ASSESSEE IS REQUIRED BY THE SAID EX PLANATION IS THAT HE HAS TO PROVE THAT THERE WAS NO FRAUD OR ANY GROSS OR WI LLFUL NEGLECT. A REASONABLE EXPLANATION WHICH MAY BE BASED ON PREPON DERANCE OF PROBABILITIES AND EVIDENCE IS SUFFICIENT TO SHIFT T HE BURDEN TO THE REVENUE. IF THERE IS NO EXPLANATION OR IF THE EXPLANATION SU BMITTED BY THE ASSESSEE IS ITA NO.3501 & 3502 /AHD/2008 M/S. HIRABHAI SAMJIBHAI PATEL HUF ASST.YEAR -1999-00 & 2000-01 - 9 - NOT FOUND TO BE SATISFACTORY WITH REGARD TO DISCHAR GE OF HIS BURDEN THAT THERE WAS NO FRAUD OR ANY GROSS OR WILLFUL NEGLECT ON HIS PART TO DECLARE THE CORRECT INCOME IN THE RETURN OF INCOME, THEN THE OF FICER IS UNDER NO OBLIGATION TO PROVE THE BURDEN WHICH WAS CONTEMPLAT ED IN AWAR ALIS CASE [(1970) 76 ITR 696 (SC)]. THE BURDEN ON THE OFFICER COMES ONLY IF THE INITIAL BURDEN OF THE ASSESSEE IS DISCHARGED [CIT V . MAHESH TRANSPORT SERVICE, (1994) 210 ITR 550, 554 (RAJ)]. BURDEN OF PROOF, HOW TO BE DISCHARGED BY THE ASSESS EE UNDER THE EXPLANATION,- THUS, WHERE A PRESUMPTION IS RAISED BY VIRTUE OF T HE PROVISIONS OF THE EXPLANATION, THE BURDEN LIES ON T HE ASSESSEE TO PROVE THE FACT THAT THE FAILURE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR ANY GROSS OR WILLFUL NEGLECT ON HIS PART. NO SP ECIAL MODE OF PROVING IS GIVEN IN THAT SECTION AND SO THE SAME MAY BE PROVED BY THE ASSESSEE LIKE ANY OTHER FACT. IN OTHER WORDS, IT IS OPEN TO THE ASSESSEE EITHER TO GIVE A POSITIVE EXPLANATION AND ADDUCE EVIDENCE TO SUBSTAN TIATE THE SAME OR WITHOUT GIVING ANY POSITIVE EXPLANATION OR PRODUCIN G EVIDENCE TO ESTABLISH FROM THE MATERIALS ON RECORD THAT THE FAILURE TO RE TURN THE CORRECT INCOME WAS NOT CAUSED BY ANY FRAUD OR GROSS OR WILLFUL NEG LECT ON HIS PART. WHEN THE EXPLANATION TO SECTION 271(1)(C) PROVIDES THAT UNLESS HE PROVES, THE EMPHASIS IS OBVIOUSLY ON PROOF OF THE FACT AND NOT ON THE FURNISHING OF AN EXPLANATION, MUCH LESS A WRITTEN EXPLANATION [ AZIMULLAH MOHD. MUSHTAQ V. CIT, (1993) 202 ITR 405, 411 (ALL)]. THUS, IF THE ASSESSEE, WHO IS REQUIRED TO PROVE THA T THE FAILURE TO RETURN THE CORRECT INCOME DID NOT ARISE FROM ANY FRAUD OR ANY GROSS OR WILFUL NEGLIGENCE ON HIS PART, FAILS TO PROVE THESE ELEMEN TS, THE PRESUMPTION AS CONTEMPLATED BY THE SAID EXPLANATION CAN BE RAISED [ CIT V. JAMNADAS & CO. (1994) 10 ITR 218, 220-21 (GUJ)]. AS THE ASSESSEE HAS NOT FILED ANY EXPLANATION IN RESPECT TO THE PENALTY NOTICE ISSUED U/S.271(1)(C) R.W.S. 274 ITA NO.3501 & 3502 /AHD/2008 M/S. HIRABHAI SAMJIBHAI PATEL HUF ASST.YEAR -1999-00 & 2000-01 - 10 - OF THE ACT, AS PER THE EXPLANATION-1 TO SECTION 271 (1)(C) OF THE ACT, THIS IS A CLEAR CUT CASE OF CONCEALMENT OF PARTICULARS OF INC OME AND THE ASSESSEE IS LIABLE FOR PENALTY. ACCORDINGLY, THESE TWO APPEALS OF THE ASSESSEE ARE DISMISSED. 11. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 30/10/2009. SD/- SD/- (P.K.BANSAL) ( MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/10/2009 PARAS# COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-V, SURAT. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD