Shri Narendrabhai Prabhubhai Patel, Surat V. The Income tax Officer,Ward-6(3), Surat

ITA 3987/AHD/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6858 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-03-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 10-12-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: U S RAINA
• Assessee Lawyers: M K PATEL
• Keywords: Bonafide mistake; Reassessment proceedings
• Section: 142(1); 147; 27; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI D K TYAGI,JM &SHRI A N PAHUJA, AM ITA NO.3987/AHD/2008 (ASSESSMENT YEAR:-2001-02) NARENDRABHAI PRABHUBHAI PATEL, PROP. OF PATEL ENTERPRISE, SIDDHI VINAYAK, AMBAWADI, DUMAS, SURAT V/S INCOME-TAX OFFICER, WARD- 6(3), SURAT PAN: ACVPP 3853 B [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI M K PATEL, AR REVENUE BY:- SHRI U S RAINA, DR O R D E R A N PAHUJA: THIS IS AN APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 13-10-2008 OF THE LEARNED CIT(A)-IV, SURAT, UPHOLDI NG THE PENALTY OF RS. 25,007/- LEVIED U/S 271(1) ( C ) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT). THE RELEVANT GROUNDS READ AS UNDER: 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN LEVYING PENALTY OF RS.25,007/- 2 IT IS THEREFORE PRAYED THAT THE ABOVE ADDITION MA Y PLEASE BE DELETED AS LEARNED MEMBERS OF THE TRIBUNAL MAY DEEM IT PROPER. 3 APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF THE HEARING OF THE APPEA L . 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT IN PURSUANCE TO RETURN DECLARING INCOME OF RS.1,81,154/- FILED B Y THE ASSESSEE ON 15-10-2001, THE ASSESSMENT IN THIS CASE WAS FINALIZ ED U/S 143(3)(II) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED T O AS THE ACT] DETERMINING, INCOME OF RS.5,60,240/-. SUBSEQUENTLY, IT WAS NOTICED BY THE ASSESSING OFFICER[AO IN SHORT[ THAT THE INCO ME CHARGEABLE TO TAX TO THE TUNE OF RS.4,61,172/- HAD ESCAPED ASSESS MENT INASMUCH ITA N O.3987/AHD/2008 2 AS THE TOTAL RECEIPTS HAD BEEN SHOWN AT RS.1,01,31, 292/- AS AGAINST RS.1,05,92,464/- AS PER THE TDS CERTIFICATES ATTACH ED WITH THE RETURN OF INCOME. ACCORDINGLY, ASSESSMENT WAS REOPENED U/ S 147 WITH THE SERVICE OF A NOTICE U/S 148 OF THE ACT ON 22.3.2005 .DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE DI D NOT COMPLY WITH THE TERMS OF NOTICE U/S 142(1) OF THE ACT ISS UED ON 15-07- 2005, 20-12-2005 AND 9-01-2006 NOR RESPONDED EVEN T O SHOW CAUSE NOTICE DATED 25.1.2006. ACCORDINGLY, THE AO BROUGHT TO TAX AN AMOUNT OF RS.4,61,172[RS.1,05,92,464-1,01,31,292]. INTER ALIA, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE A LSO INITIATED FOR CONCEALMENT OF INCOME AND FURNISHING INACCURATE PAR TICULARS THEREOF. ON APPEAL THE LD. CIT(A) VIDE HIS ORDER DATED 28-11 -2006 UPHELD THE ADDITION TO THE EXTENT OF RS. 71,245/-. A COPY THE SAID APPELLATE ORDER HAS NOT BEEN PLACED BEFORE US. 3. AFTER THE RECEIPT OF THE ORDER OF THE LD. CIT(A) , IN RESPONSE TO A SHOWCAUSE NOTICE BEFORE LEVY OF PENALTY, THE ASSESS EE DID NOT RESPOND NOR FURNISHED ANY EXPLANATION .ACCORDINGLY, THE AO IMPOSED A PENALTY OF RS.25,007/- @100% OF THE TAX SOUGHT TO BE EVADED ON THE INCOME OF RS.71,245/-. 4. ON APPEAL, THE LEARNED CIT(A) UPHELD THE LEVY OF PENALTY ON THE GROUND THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS OF INCOME FOR WHICH NO EXPLANATION WAS FILED. 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED AR ON B EHALF OF THE ASSESSEE REITERATED THEIR SUBMISSIONS BEFORE THE CI T(A) WHILE THE LEARNED DR SUPPORTED THE FINDINGS OF THE LEARNED C IT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, IN THIS CASE REASSESSMENT WAS COMPLE TED U/S 144 OF THE ACT AND ADDITION WAS MADE BY THE AO SINCE THE ASSESSEE D ID NOT COMPLY WITH THE ITA N O.3987/AHD/2008 3 TERMS OF NOTICE U/S 142(1) OF THE ACT ISSUED ON 1 5-07-2005, 20-12- 2005 AND 9-01-2006 NOR RESPONDED EVEN TO SHOW CAUSE NOTICE DATED 25.1.2006 DURING THE COURSE OF REASSESSMENT PROCEED INGS. ON APPEAL, ADDITION WAS SUSTAINED TO THE EXTENT OF RS. 71,425/-. ADMITTEDLY, THE ASSESSEE DID NOT REFLECT THE AFORES AID AMOUNT OF RS.71,425/- IN THE RETURN FILED ORIGINALLY ON 15.1 0.2001 AND THUS, CONCEALED THE INCOME TO THAT EXTENT IN HIS RETURN . EVEN DURING THE PENALTY PROCEEDINGS, THE ASSESSEE DID NOT FURNISH A NY EXPLANATION WHATSOEVER. THUS, AS IS APPARENT FROM THE FACTS O F THE CASE, THE ASSESSEE DID NOT SUBMIT RELEVANT DETAILS AND DOCUMENTS SOUGHT BY THE AO DURING THE REASSESSMENT PROCEEDINGS NOR SUBMITTED ANY EXPLANA TION DURING THE PENALTY PROCEEDINGS, DESPITE SUFFICIENT OPPORTUNITY ALLOWED . IN THE ABSENCE OF ANY EXPLANATION EITHER DURING THE REASSESSMENT OR EVEN DURING THE PENALTY PROCEEDINGS, THERE IS NO QUESTION OF ANY BONAFIDE MISTAKE ON THE PART OF THE ASSESSEE. BEFORE PROCEEDING FURTHER , WE MAY HAVE A LOOK AT THE RELEVANT PROVISIONS OF SECTION 271(1)(C) OF THE ACT, WHICH R EAD AS UNDER: 271. FAILURE TO FURNISH RETURNS, COMPLY WITH NOTICES, CO NCEALMENT OF INCOME, ETC. (1) IF THE ASSESSING OFFICER OR THE COMMISSIONER (A PPEALS) OR THE COMMISSIONER IN THE COURSE OF ANY PROCEEDINGS UNDE R THIS ACT, IS SATISFIED THAT ANY PERSON- .. (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME, HE MAY DIRECT THAT SUCH PERSON SHALL PAY BY WAY OF PENALTY,- (III) IN THE CASES REFERRED TO IN CLAUSE (C) , IN ADDITION TO ANY TAX PAYABLE BY HIM, A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED THREE TIMES, THE AMOUNT OF TAX SOUGHT TO BE EVADED BY REASON OF THE CONCEALMENT OF PARTICULARS OF HIS INC OME OR THE FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME EXPLANATION 1.-WHERE IN RESPECT OF ANY FACTS MATERI AL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT,- ITA N O.3987/AHD/2008 4 (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OF FERS AN EXPLANATION WHICH IS FOUND BY THE ASSESSING OFFICER OR THE DEPUTY COMMISSIONER (APPEALS) OR THE COMMISSIONER (APPEALS) TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE IS N OT ABLE TO SUBSTANTIATE AND FAILS TO PROVE THAT SUCH EXPLANATI ON IS BONAFIDE AND THAT ALL THE FACTS RELATING TO THE SAM E AND MATERIAL TO THE COMPUTATION OF HIS TOTAL INCOME HAV E 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 P URPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. 6.1 AS IS EVIDENT FROM THE AFORESAID CL. (C) OF S. 271(1) OF THE ACT, THE WORDS USED ARE 'HAS CONCEALED THE PARTICULARS OF HIS INCO ME' OR FURNISHED 'INACCURATE PARTICULARS OF SUCH INCOME'. THUS, BOTH IN CASE OF CONCEALMENT AND INACCURACY, THE PHRASE 'PARTICULARS OF INCOME' HAS BEEN USED. T HE LEGISLATURE HAS NOT USED THE WORDS 'CONCEALED HIS INCOME'. FROM THIS IT WOUL D BE APPARENT THAT PENAL PROVISION WOULD OPERATE WHEN THERE IS A FAILURE TO DISCLOSE FULLY OR TRULY ALL THE PARTICULARS. THE WORDS 'PARTICULARS OF INCOME' REFE R TO THE FACTS WHICH LEAD TO THE CORRECT COMPUTATION OF INCOME IN ACCORDANCE WITH TH E PROVISIONS OF THE ACT. SO WHEN ANY FACT MATERIAL TO THE DETERMINATION OF AN I TEM AS INCOME OR MATERIAL TO THE CORRECT COMPUTATION IS NOT FILED OR THAT WHICH IS FILED IS NOT ACCURATE, THEN THE ASSESSEE WOULD BE LIABLE TO PENALTY UNDER S. 271(1) (C) OF THE ACT. THE EXPRESSION 'HAS CONCEALED THE PARTICULARS OF INCOME' AND 'HAS FURNISHED INACCURATE PARTICULARS OF INCOME' HAVE NOT BEEN DEFINED EITHER IN SECTION 271 OR ELSEWHERE IN THE ACT. HOWEVER, NOTWITHSTANDING THE DIFFERENCE IN THE TWO CIRCUMSTANCES, IT IS NOW WELL ESTABLISHED THAT THEY LEAD TO THE SAME EFF ECT NAMELY, KEEPING OFF A CERTAIN PORTION OF THE INCOME FROM THE RETURN. ACCO RDING TO LAW LEXICON, THE WORD 'CONCEAL' MEANS: 'TO HIDE OR KEEP SECRET. THE WORD 'CONCEAL' IS C ON+CELARE WHICH IMPLIES TO HIDE. IT MEANS TO HIDE OR WITHDRAW FROM OBSERVATION; TO C OVER OR KEEP FROM SIGHT; TO PREVENT THE DISCOVERY OF ; TO WITHHOLD KNOWLEDGE OF . THE OFFENCE OF CONCEALMENT ITA N O.3987/AHD/2008 5 IS, THUS, A DIRECT ATTEMPT TO HIDE AN ITEM OF INCOM E OR A PORTION THEREOF FROM THE KNOWLEDGE OF THE INCOME-TAX AUTHORITIES.' IN WEBSTER'S DICTIONARY, 'INACCURATE' HAS BEEN DEFI NED AS : 'NOT ACCURATE, NOT EXACT OR CORRECT; NOT ACCORDING TO TRUTH; ERRONEOUS ; AS AN INACCURATE STATEMENT, COPY OR TRANSCRIPT.' 6.2 IF THE DISCLOSURE OF FACTS IS INCORRECT OR FALSE TO THE KNOWLEDGE OF THE ASSESSEE AND IT IS ESTABLISHED, THEN SUCH DISCLOSUR E CANNOT TAKE IT OUT FROM THE PURVIEW OF THE ACT OF CONCEALMENT OF PARTICULARS OR FURNISHING INACCURATE PARTICULARS THEREOF FOR THE PURPOSE OF LEVY OF PENA LTY. THE PENALTY U/S 271(1)(C) OF THE ACT IS LEVIABLE IF THE AO IS SATIS FIED IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT THAT ANY PERSON HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS OF SUCH INCOME. IN THIS CONTEXT, HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AM SHAH & CO. VS. CIT,238 ITR 415(GUJ) OBSERVED THAT THERE CANNOT BE A STRAIGHT JACKET FORMULA FOR DET ECTION OF THESE DEFAULTS OF CONCEALMENT OR OF FURNISHING INACCURATE PARTICULARS OF INCOME AND INDEED CONCEALMENT OF PARTICULARS OF INCOME AND INACCURATE PARTICULARS OF INCOME MAY AT TIMES OVERLAP, AS FOR EXAMPLE WHEN HALF OF THE INCO ME UNDER A PARTICULAR HEAD IS NOT AT ALL DISCLOSED, THAT WOULD BE CONCEALED TO TH AT EXTENT WHILE THE REMAINING HALF WHICH IS IN FACT DISCLOSED WOULD, NOT BEING HI S COMPLETE DISCLOSURE AMOUNT TO INACCURATE PARTICULARS OF INCOME AS REGARDS THAT CO NSTITUENT ITEM OF THE RETURN. BY THE VERY NATURE OF THE ASSESSMENT PROCEEDINGS THE I TO WHILE ASCERTAINING THE TOTAL INCOME CHARGEABLE TO TAX WOULD BE IN A POSITI ON TO DETECT THE SPECIFIC OR DEFINITE PARTICULARS OF INCOME CONCEALED OR OF WHIC H FALSE PARTICULARS ARE FURNISHED. WHERE IN THE CONSTITUENTS OF INCOME RETU RNED, SUCH SPECIFIC OR DEFINITE PARTICULARS OF INCOME ARE DETECTED AS CONCEALED, TH EN EVEN IN THE TOTAL INCOME FIGURE TO THAT EXTENT THEY REFLECT, IT WOULD AMOUNT TO CONCEALMENT TO THAT EXTENT. IN THE SAME WAY WHERE SPECIFIC AND DEFINITE PARTICULAR S OF INCOME ARE DETECTED AS INACCURATE, THEN SUCH FIGURE WILL ALSO MAKE THE TOT AL INCOME INACCURATE IN PARTICULARS TO THE EXTENT IT DOES NOT INCLUDE SUCH INCOME. WHETHER IT BE A CASE OF ONLY CONCEALMENT OR OF ONLY INACCURACY OR BOTH, THE PARTICULARS OF INCOME SO VITIATED WOULD BE SPECIFIC AND DEFINITE AND BE KNOW N IN THE ASSESSMENT PROCEEDINGS BY THE ITO, WHO ON BEING SATISFIED ABOU T EACH CONCEALMENT OR INACCURACY OF PARTICULARS OF INCOME WOULD BE IN A P OSITION TO INITIATE THE PENALTY PROCEEDINGS ON ONE OR BOTH OF THE GROUNDS OF DEFAUL T AS MAY HAVE BEEN SPECIFICALLY AND DIRECTLY DETECTED. THE OPPORTUNITY OF HEARING GIVEN BY THE NOTICE UNDER SECTION 271(1)(C), OBVIOUSLY IS AGAINST SUCH CONCEALMENT AND INACCURACY AS IS DETECTED IN THE ASSESSMENT PROCEEDINGS. ITA N O.3987/AHD/2008 6 6.3. INDISPUTABLY, THE ASSESSEE DID NOT SUBMIT THE DETAILS AND DOCUMENTS SOUGHT BY THE AO DURING THE REASSESSMENT PROCEEDING S . EVEN DURING THE PENALTY PROCEEDINGS, THE ASSESSEE DID NOT SUBMIT ANY EXPLA NATION AT ALL BEFORE THE AO . IN THESE CIRCUMSTANCES, IT DOES NOT LIE IN THE MOUT H OF THE ASSESSEE THAT IT WAS NOT CONCEALING ITS INCOME BY FURNISHING INACCURATE PARTICULARS THEREOF IN THE RETURN FILED ORIGINALLY . IN THE COURSE OF PENALTY PROCEEDINGS , THE ASSESSEE DID NOT BRING ANY MATERIAL BEFORE THE ASSESSING OFFICER TO REBUT THE INFERENCES DRAWN BY THE ASSESSING OFFICER IN THE COURSE OF REASSESSMENT PROCEEDINGS. IN TERMS OF PROVISIONS OF SEC. 271(1)(C) OF THE ACT READ WITH E XPLANATION 1 THERETO AND THE JUDICIAL PRONOUNCEMENTS IN THE CASE OF B.A. BALASU BRAMANIAM & 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 50 R. 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 EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT RAISES A PRESUMPTION THAT CAN BE REBUTTED BY THE ASSESSEE WI TH REFERENCE TO FACTS OF THE CASE. THUS, THE ONUS IS ON THE ASSESSEE TO REBUT TH E INFERENCE OF CONCEALMENT. THE ABSENCE OF EXPLANATION ITSELF WOULD ATTRACT PEN ALTY. THE ONUS LAID DOWN UPON THE ASSESSEE TO REBUT THE PRESUMPTION RAISED UNDER EXPLANATION 1 WOULD NOT BE DISCHARGED BY ANY FANTASTIC OR FANCIFUL EXPLANATION . IT IS NOT THE LAW THAT ANY AND EVERY EXPLANATION HAS TO BE ACCEPTED . IN OUR CON SIDERED VIEW, THE PROVISIONS OF CLAUSE (A ) OF EXPLANATION 1 TO SECTION 271(1)(C), WHEN THE ASSESSEE DID NOT SUBMIT ANY EXPLANATION DURING PENALTY PROCEEDINGS NOR RELEVANT DETAILS AND DOCUMENTS DESIRED BY THE AO DURING THE REASSESSMENT PROCEEDINGS, IS CLEARLY ATTRACTED AND THE ASSESSEE HAS MISERABLY FAILED TO DISCHARGE THE ONUS LAID DOWN IN THIS EXPLANATION. 6.4 WE FIND THAT THE LEGAL POSITION IS SQUARELY COVERED BY THE DECISION OF THE HONBLE APEX COURT IN K.P. MADHUSUDHANAN V. CIT [20 01] 251 ITR 99 . THEREIN, THE HONBLE COURT AFFIRMED THE DECISION OF THE KERA LA HIGH COURT IN CIT V. K.P. ITA N O.3987/AHD/2008 7 MADHUSUDANAN [2000] 246 ITR 218 . CONSIDERING THE EFFECT OF THE ADDITION OF THE EXPLANATION TO SECTION 271(1) OF THE ACT AND THE AM ENDMENT TO SECTION 271(1)(C) OF THE ACT BY DELETION OF THE WORD 'DELIBERATELY', THE KERALA HIGH COURT CAME TO THE CONCLUSION THAT WHETHER PENALTY WAS LIABLE TO B E IMPOSED IN A CASE WHERE THE ASSESSEE COULD OFFER NO ACCEPTABLE EXPLANATION FOR THE INCOME NOT DISCLOSED OR THE INACCURATE PARTICULARS HE HAD FURNISHED IN HIS RETURN, HAD TO BE EXAMINED AND IF FOUND UNACCEPTABLE, PENALTY WAS LIABLE TO BE IMP OSED. THE KERALA HIGH COURT OBSERVED AS FOLLOWS : 'SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961, IS ATTRACTED WHERE, IN THE COURSE OF ANY PROCEEDINGS UNDER THE ACT, THE ASSESSING OFF ICER OR THE FIRST APPELLATE AUTHORITY IS SATISFIED THAT: (A) ANY PERSON HAS CON CEALED THE PARTICULARS OF HIS INCOME; OR (B) HAS FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. THE EXPRESSIONS 'HAS CONCEALED' AND 'HAS FURNISHED INAC CURATE PARTICULARS' HAVE NOT BEEN DEFINED EITHER IN THE SECTION OR ELSEWHERE IN THE ACT. HOWEVER, NOTWITHSTANDING DIFFERENCES IN THE TWO CIRCUMSTANCE S, THEY LEAD TO THE SAME EFFECT, VIZ., KEEPING OFF A CERTAIN PORTION OF INCO ME. THE FORMER IS DIRECT WHILE THE LATTER MAY BE INDIRECT IN ITS EXECUTION. A CONSPECTUS OF THE EXPLANATION ADDED BY THE FINANC E ACT, 1964, AND THE SUBSEQUENT SUBSTITUTED EXPLANATIONS MAKES IT CLEAR THAT THE STATUTE VISUALIZED THE ASSESSMENT PROCEEDINGS AND PENALTY PROCEEDINGS TO B E WHOLLY DISTINCT AND INDEPENDENT OF EACH OTHER. IN ESSENCE, THE EXPLANAT ION (BOTH AFTER 1964 AND 1976) IS A RULE OF EVIDENCE. PRESUMPTIONS WHICH ARE REBUTTABLE IN NATURE ARE AVAILABLE TO BE DRAWN. THE INITIAL BURDEN OF DISCHA RGING THE ONUS OF REBUTTAL IS ON THE ASSESSEE. EXPLANATION 1 AUTOMATICALLY COMES INT O OPERATION WHEN, IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF TOTAL I NCOME OF ANY PERSON, THERE IS FAILURE TO OFFER AN EXPLANATION OR AN EXPLANATION I S OFFERED WHICH IS FOUND TO BE FALSE BY THE ASSESSING OFFICER OR THE FIRST APPELLA TE AUTHORITY, OR AN EXPLANATION IS OFFERED WHICH IS NOT SUBSTANTIATED. IN SUCH A CASE, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING THE TOTAL INCOME IS DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. A S PER THE PROVISION OF EXPLANATION 1, THE ONUS TO ESTABLISH THAT THE EXPLA NATION OFFERED WAS BONA FIDE AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS INCOME HAVE BEEN DISCLOSED BY HIM WILL BE ON THE PERSON CH ARGED WITH CONCEALMENT. THE ASSESSING OFFICER IS NOT OBLIGED TO INTIMATE THE AS SESSEE THAT EXPLANATION 1 TO SECTION 271(1)(C) IS PROPOSED TO BE APPLIED. THE SC HEME OF THE PROVISIONS DOES NOT PROVIDE FOR SUCH A REQUIREMENT EITHER DIRECTLY OR INFERENTIALLY. IN SIR SHADILAL'S CASE [1987] 168 ITR 705 , WHAT THE SUPREME COURT OBSERVED WAS THAT THERE MA Y BE SEVERAL REASONS FOR WHICH THE ASSESSEE MAY HAVE OFFERED AN AMOUNT FOR ADDITION, BUT THAT ITSELF IS NOT SUFFICIENT TO INFE R CONCEALMENT. IT HAS NOT LAID DOWN AS A RULE OF GENERAL APPLICATION THAT WHENEVER SUCH IS THE CASE, PENALTY CANNOT BE IMPOSED. ON THE CONTRARY, IN SUCH CASES ALSO THE AS SESSEE IS REQUIRED TO DISCHARGE THE BURDEN PLACED BY THE EXPLANATION APPE NDED TO SECTION 271(1)(C). IN CASE AN EXPLANATION IS OFFERED, THE ASSESSING OF FICER IS TO EXAMINE IT AND FIND ITA N O.3987/AHD/2008 8 OUT WHETHER THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THAT THERE WAS NO CONCEALMENT. HELD, THAT, IN THE CASE AT HAND, NO EXPLANATION WOR TH THE NAME WAS OFFERED BY THE ASSESSEE. THE STATEMENT MADE BY THE ASSESSEE WAS TO THE EFFECT THAT HAND LOANS WERE OBTAINED WHICH WERE INTENDED TO BE REFUNDED IM MEDIATELY AND, THEREFORE, THE ENTRIES WERE NOT MADE, BUT, LATER ON, THE ARRAN GEMENT DID NOT WORK OUT. THEREFORE, THE AMOUNT WAS OFFERED FOR TAXATION. THE RE WAS A CLEAR ADMISSION THAT THE ENTRIES WERE NOT MADE ON THE RELEVANT DATES. IT WAS NOT A CASE WHERE ENTRIES WERE MADE ON THE RELEVANT DATES AND THE SOURCE OF M ONEY WAS OMITTED. THE ENTRIES ON THE CONTRARY WERE MADE ON DATES WHEN THE RE WAS SUFFICIENT CASH BALANCE. THE INTENTION TO HIDE THE ACTUAL STATE OF AFFAIRS WAS CLEAR. THE EXPLANATION OFFERED WAS FANCIFUL AND VAGUE. THE IMP OSITION OF PENALTY WAS VALID AND THE TRIBUNAL ERRED IN CANCELLING IT.' 6.5 HONBLE SUPREME COURT IN THE CASE OF K.P.MA DHUSUDANAN VS. CIT,251 ITR 99(SC) WHILE AFFIRMING THE AFORESAID VIEW HELD THAT WE FIND IT DIFFICULT TO ACCEPT AS CORRECT THE TWO JUDGMENTS AFOREMENTIONED. THE EXPLANATION TO SECTION 271(1)(C) IS A PART OF SECTI ON 271. WHEN THE INCOME-TAX OFFICER OR THE APPELLATE ASSISTANT COMMISSIONER ISS UES TO AN ASSESSEE A NOTICE UNDER SECTION 271, HE MAKES THE ASSESSEE AWARE THAT THE PROVISIONS THEREOF ARE TO BE USED AGAINST HIM. THESE PROVISIONS INCLUDE TH E EXPLANATION. BY REASON OF THE EXPLANATION, WHERE THE TOTAL INCOME RETURNED BY THE ASSESSEE IS LESS THAN 80 PER CENT. OF THE TOTAL INCOME ASSESSED UNDER SECTIO N 143 OR 144 OR 147, REDUCED TO THE EXTENT THEREIN PROVIDED, THE ASSESSEE IS DEE MED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE P ARTICULARS THEREOF, UNLESS HE PROVES THAT THE FAILURE TO RETURN THE CORRECT INCOM E DID NOT ARISE FROM ANY FRAUD OR NEGLECT 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 STATED IN THE EXPLANATION, THAT HIS FAILURE TO RETURN HIS COR RECT INCOME WAS NOT DUE TO FRAUD OR NEGLECT, HE SHALL BE DEEMED TO HAVE CONCEALED TH E PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF AND, CONSE QUENTLY, BE LIABLE TO THE PENALTY PROVIDED BY THAT SECTION. NO EXPRESS INVOCA TION OF THE EXPLANATION TO SECTION 271 IN THE NOTICE UNDER SECTION 271 IS, IN OUR VIEW, NECESSARY BEFORE THE PROVISIONS OF THE EXPLANATION THEREIN ARE APPLIED. THE HIGH COURT AT BOMBAY WAS, THEREFORE, IN ERROR IN THE VIEW THAT IT TOOK AND TH E DIVISION BENCH IN THE IMPUGNED JUDGMENT WAS RIGHT. 6.6 WE FIND THAT WHILE IMPOSING PENALTY UNDER S ECTION 271(1)(C), THE ASSESSING OFFICER HAS NOT INVOKED EXPLANATION 1 TO SECTION 27 1(1)(C). BUT THEIR LORDSHIPS OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. RAJESHWAR SINGH [1986] 162 ITR 173 , HAVE HELD THAT EXPLANATION 1 TO SECTION 271(1)(C) CAN BE INVOKED FOR THE FIRST TIME BY THE ITAT. BY FOLLOWIN G THE AFORESAID JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF RAJESHWA R SINGH THE ITAT, ITA N O.3987/AHD/2008 9 CHANDIGARH BENCH IN THE CASE OF ROSHAN LAL MADAN VS . ASSTT. CIT (1998) 62 TTJ (CHD)(TM) 1 : (2000) 245 ITR 36 (AT)(CHD)., HAS TAK EN THE SAME VIEW THAT EXPLANATION 1 TO SECTION 271(1)(C) CAN BE INVOKED F OR THE FIRST TIME BY THE TRIBUNAL. 6.7 THEREFORE, IN VIEW OF THE FACTS AND CIRCUMS TANCES AND IN THE LIGHT OF ABOVE NOTED AUTHORITATIVE PRONOUNCEMENTS, WHEN THE ASSESS EE FAILED TO DISCHARGE THE ONUS LAID DOWN UPON HIM IN TERMS OF EXPLANATION 1 T O SECTION 271(1)(C) OF THE ACT AND DID NOT OFFER ANY EXPLANATION EITHER DURING THE REASSESSMENT PROCEEDINGS AND EVEN DURING THE PENALTY PROCEEDINGS , WE HAVE NO OPTION BUT TO UPHOLD THE FINDINGS OF THE LD. CIT(A), CONFIRMING THE LEVY OF PENALTY . EVEN OTHERWISE THE BREACH OF CIVIL OBLIGATION WHICH ATTRACTS A PENALTY UNDER THE PROVISIONS OF AN ACT WOULD IMMEDIATELY ATTRACT THE LEVY OF PENALTY IRRES PECTIVE OF THE FACT WHETHER THE CONTRAVENTION WAS MADE BY THE DEFAULTER WITH ANY GU ILTY INTENTION OR NOT, VIDE CHAIRMAN, SEBI V. SHRIRAM MUTUAL FUND [2006] 131 CO MP CAS 591 (SC) ; [2006] 5 SCC 361. THIS VIEW HAS BEEN REITERATED BY THE HON BLE SUPREME COURT IN THEIR DECISION DATED 29.9.2008 IN THE CASE OF UNION OF I NDIA AND OTHERS VS. DHARMENDRA TEXTILE PROCESSORS AND OTHERS, IN CIVIL APPEAL NOS.10289 -10303 OF 2003. 6.8 . A VERY HEAVY ONUS WAS PLACED ON THE ASSESSEE TO EXPLAIN THE DIFFERENCE BETWEEN THE ASSESSED INCOME AND RETURNED INCOME AND THE ASSESSEE DID NOT DISCHARGE THE SAID ONUS. SINCE THE ASSESSEE FAILED TO ESTABLISH THE BONAFIDE OF THEIR CLAIM, THEREFORE, IN TERMS OF EXPLANATION 1 T O SECTION 271(1)(C) OF THE ACT, THE ONUS IS NOT DISCHARGED BY THE ASSESSEE, DESPITE SUF FICIENT OPPORTUNITY ALLOWED BY THE LOWER AUTHORITIES. THUS, LEVY OF PENALTY IS JUS TIFIED.[CIT VS. ALTRON ELECTRONICS INDIA LTD.,301 ITR 66(KAR)]. 7.. IN THE LIGHT OF THE DISCUSSION MADE ABOVE, IT IS THUS CLEAR THAT ALL THE MATERIAL FACTS AND PARTICULARS RELATING TO THE ASSESSEE'S CO MPUTATION OF INCOME WERE NEVER DISCLOSED BY THE ASSESSEE, AND IT IS FURTHER CLEAR THAT THE ASSESSEE DID NOT OFFER ANY EXPLANATION AT ALL. IN THIS VIEW OF THE MATTER AND IN THE LIGHT OF DECISIONS OF THE HONBLE SUPREME COURT AND JURISDICTIONAL HIGH C OURT REFERRED TO ABOVE, WE ARE OF THE OPINION THAT THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE THE BURDEN ITA N O.3987/AHD/2008 10 THAT LAY UPON THEM BY EXPLANATION 1 TO S. 271(1)(C) OF THE ACT. THEREFORE, WE HAVE NO HESITATION IN UPHOLDING THE ORDER OF THE LD. CIT (A) IN CONFIRMING THE PENALTY IMPOSED BY THE AO UNDER S. 271(1)(C) OF THE ACT . C ONSEQUENTLY, GROUND NO.1 IN THE APPEAL IS DISMISSED. 8. GROUND NO.2 IN THE APPEAL, DOES NOT ARISE OUT OF THE IMPUGNED ORDER NOR ANY SUBMISSIONS HAVING BEEN MADE BEFORE U S WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED IN TERMS OF RE SIDUARY GROUND NO.3, THESE GROUNDS ARE DISMISSED. 9. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 1-04-2011 SD/- SD/- (D K TYAGI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATED : 1-04-2011 COPY OF THE ORDER FORWARDED TO: 1. NARENDRABHAI PRABHUBHAI PATEL, PROP. OF PATEL EN TERPRISE, SIDDHI VINAYAK, AMBAWADI, DUMAS, SURAT 2. INCOME-TAX OFFICER, WARD-6(3), SURAT 3. CIT CONCERNED 4. CIT(A)-IV, SURAT 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD