Income Tax Appellate Tribunal - Delhi
Ram Chand Ram Kishen Chawla vs Income-Tax Officer on 16 February, 1989
Equivalent citations: [1992]40ITD141(DELHI)
ORDER
Mehra J., Judicial Member
1. The assessee, by the present appeal, challenges the order dated February 6, 1986, of the learned Appellate Assistant Commissioner of Income-tax, New Delhi, for the assessment year 1976-77, inter alia, on the following effective and comprehensive ground ;
" That the learned Appellate Assistant Commissioner was not justified in upholding the penalty of Rs. 10,214 levied by the learned Income-tax Officer under Section 271(1)(c) of the Act without appreciating the facts op the case ? "
2. In this case, a return declaring nil income was filed on July 28, 1980. It was mentioned in the return that due to disputes amongst the partners, no business was done. Subsequently, a revised return was filed on March 26, 1981, declaring a total income of Rs. 40,400 on an estimate basis. Thereafter, a revised return was filed declaring a total income of Rs. 18,400. Books of account were not produced during the assessment proceedings and only purchase and sale vouchers were produced from which the learned Income-tax Officer could not verify whether the details declared by the assessee were correct. Against the above background, the assessee's income was estimated at Rs. 42,000 as against Rs. 18,400 declared in the revised return which resulted in an addition of Rs. 23,600. Penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961, for concealment of income or particulars thereof were initiated. The penalty notice appears to have not been complied with by the assessee. Thus, a penalty of Rs. 10,214 was imposed, vide order dated March 28, 1985, framed under Section 271(1)(c) of the Act with the following observation :
" Under these circumstances, I am left with no alternative but to complete the penalty proceedings on the basis of the material available on record. The assessee filed the return declaring a total income of Rs. 18,400 and in the absence of books of account it was estimated at Rs. 42,000. The difference of Rs. 23,600 (42,000 - 18,400) is to be treated as income from undisclosed sources in respect of which the assessee has not furnished any explanation. I am satisfied that the assessee has furnished inaccurate particulars of income to the extent of Rs. 23,600 and the penalty provisions under Section 271(1)(c) are attracted in this case. I, therefore, impose a penalty of Rs. 10,214 being 100% of the tax sought to be evaded which is calculated as under."
3. The said penalty order was subsequently contested by the assessee. It was "argued before the learned Appellate Assistant Commissioner that income was returned on estimate basis and that was subsequently revised by applying various net profit rates of the last 5 years on sales of Rs. 2,55,397. It was also pointed out that the learned Income-tax Officer also assessed the income on estimate only. The assessee's contention was that no return was filed and since income was determined on estimate basis, the proviso to Section 271(1)(c) was not attracted. Mention was also made of some case-law. The assessee's appeal was dismissed by the learned Appellate Assistant Commissioner, after considering the submissions in the following manner :
" I have considered these submissions. The fact is that the appellant had been maintaining books of account for the period and these were not produced before the Income-tax Officer on the plea that they were with one of the partners who was not co-operating, the Income-tax Officer estimated the income since I am unable to agree that penalty under Section 271(1)(c) is not attracted merely because the income has been determined by estimate. From various decisions of the courts when under similar circumstances on the facts of the case penalty for concealment has been held to be leviable. For instance, A.K. Bashu Sahib v. CIT [1977] 108 ITR 736 (Mad). I agree with the ITO's finding that the appellant has furnished inaccurate particulars of his income. The penalty levied is correct. It is upheld. The appeal is dismissed."
4. Therefore, the present appeal by the assessee before us, inter alia, on the ground mentioned hereinabove. It was argued before us by Shri J.N. Sehgal, learned advocate on behalf of the assessee, that penalty proceedings were not required to be initiated in this case and that the erroneous action should not have been confirmed by the learned Appellate Assistant Commissioner. He also mentioned that a reply dated December 29, 1984, was filed before the learned Income-tax Officer and a copy whereof is said to be placed at page 4 of the assessee's paper book. A copy of some sort of reply is said to be placed at page 6 of the paper book also. Mention was also made of page 1 of the paper book being some sort of a chart showing the turnover, net profit income declared, income assessed, etc. It was contended that, when the assessment was framed on estimate basis, penalty under Section 271(1)(c) was not exigible and, in this connection, mention was also made of the ratio in the case of CIT v. K.L. Mangal Sain [1977] 107 ITR 598 (All) and CIT v. Nawab and Bros. [1977] 107 ITR 681 (All).
5. On behalf of the Revenue the learned Departmental Representative contended that the assessee's turnover is shown at Rs. 25,05,970 as if maximum business was conducted during the year under consideration and it was wrong to suggest that normal business was not done during the relevant period. Reliance was also placed on the ratio in the case of CIT v. Swarup Cold Storage and General Mills [1982] 136 ITR 435 (All) and also on CIT v. M. Habibullah [1982] 136 ITR 716 (All). Mention was also made of the ratio in the case of Addl CIT v. Bihar State Co-operative Marketing Union Ltd, [1987] 163 ITR 450 (Patna) and another case reported in CIT v. Hoshiarpur Express Transport Co. Ltd. [1986] 162 ITR 393 (P & H). According to the learned Departmental Representative, the penalty proceedings were rightly initiated and penalty was correctly imposed and confirmed. It was also mentioned that, in such like situation, it was not necessary to prove mens rea on the part of the assessee.
6. In reply, it was submitted by learned counsel, Shri Sehgal, that there was no deliberate concealment of income or particulars thereof and thus the relief should not have been denied to the assessee.
7. Rival submissions have been heard and considered and the record carefully perused. In this case, there are some undisputed facts which require to be highlighted at this stage itself. The status of the assessee is of a registered firm engaged in the business of purchase and sale of grey cloth. It was understood during the hearing before us that the return was filed on July 28, 1980, showing nil income. Assessment order was framed earlier to that under Section 144 of the Income-tax Act, 1961, on March 30, 1979, at Rs. 40,000. The said assessment was reopened under Section 146 of the Act. The assessee filed a revised return on March 26, 1981, showing income of Rs. 40,400. The said revised return was later on revised and the income shown was reduced to Rs. 18,400. There were no books of account to properly support the figures returned in the returns. The learned Income-tax Officer estimated the income at Rs. 42,000. The resultant addition of Rs. 23,600 was not challenged by the assessee, i.e., the assessment order was accepted by the assessee. The penalty order gives the impression as if the notice was not complied with. The chart at page 1 of the assessee's paper book gives an indication that, for the year under consideration, the assessee's turnover was highest at Rs. 25,05,970. Penalty proceedings were initiated with reference to concealment of Rs. 23,600 and the penalty order was framed and confirmed in the light of the above circumstances.
8. Now, the issue for consideration before us is as to whether, in the circumstances of the present case, penalty proceedings were required to be initiated and, for that matter, penalty was required to be imposed and whether the learned Appellate Assistant Commissioner should have confirmed such penalty order.
9. From the details in page 1 of the paper book, i.e., some sort of a comparative statement of sales, net profit and income assessed, it is possible to presume that the assessee did maximum business during the relevant accounting period. This inference can safely be drawn by seeing the figure of turnover. The assessee's plea that there were some disputes amongst the partners is not supported by the trading results. In fact, the trading results give the impression that the assessee did very well during the relevant period and also earned normal profit. Thereafter, it is quite safe to presume that the assessee was the best judge of its affairs. It was for the assessee to know, on the basis of the business conducted by it as to how much profit was earned. Excepting the assessee, nobody else could be considered to be knowing the profit figures. Since it is a registered firm by status, the assessee must have maintained accounts which were not shown to support its stand before the lower authorities. The assessee in fact kept changing its own stand as is clear from various returns filed before the lower authorities. In three different returns, different incomes were shown. In the first two returns, the income was shown at Rs. 40,000 and at Rs. 40,400. Subsequently, the last figure was revised to Rs. 18,400. Thus, according to the assessee, its income for the year under consideration was of Rs. 18,400 whereas for the immediately preceding assessment year, the assessee itself declared income of Rs. 48,635 and for the still earlier assessment year at Rs. 73,263. These are the facts existing at page 1 of the assessee's paper book. In the above circumstances, it was for the assessee to satisfy itself and the Revenue authorities, that, for the year under consideration, the income earned was Rs. 18,400. It was the assessee's legal duty to reflect the correct figure as it alone was conversant with the affairs of the assessee's trade. It was for the assessee to prove that the figure returned at Rs. 18,400 was correct, genuine and bona fide returned. In case the assessee was indeed satisfied that that was the correct figure and nothing more then, why an addition of Rs. 23,600 was not agitated before the appellate authorities. This aspect of the matter is absolutely unclear to us. We tried to ascertain during the hearing before us but no purposeful light was thrown on the subject on behalf of the assessee. By not challenging the addition, the assessee itself tacitly accepted that its income was or could be of the order of Rs. 42,000 as estimated by the learned Income-tax Officer. This shape of events gives a clear indication that the assessee was hiding more than it showed. May be, in the assessee's opinion, showing of the correct affairs could be still further disadvantageous to itself. This aspect could only be scrutinised with reference to proper records which were never put across to the Revenue. Now, it is to be seen that, for not convincing the Revenue authorities with reference to record, who is responsible. In our view, naturally, the assessee. The assessee itself created a situation which it was legally bound to explain and get out of.
10. The penalty proceedings in this case for concealment of income are seen to have been initiated in the above background. No doubt, according to the assessee, the reply was filed before the learned Income-tax Officer during the penalty proceedings on the basis of page 4 of the paper book but a perusal of penalty order gives the impression that the penalty notice was ignored. This reference is further fortified by the absence of any submission or ground in this respect in the appeal preferred by the assessee before the learned Appellate Assistant Commissioner and for that matter before us. There is no mention therein that the assessee's reply was not considered by the learned Income-tax Officer at the time of finalising the penalty matter. In case a reply was there on behalf of the assessee and the same was not considered by the learned Income-tax Officer, the assessee must have taken a plea before the appellate authorities. Since no such plea is taken, it is quite safe to presume that the penalty notice was indeed not cared for. The penalty was levied in the above background and confirmed also for the same reasons.
11. Now, the Issue for consideration before us is as to whether the learned Appellate Assistant Commissioner was legally right in confirming a penalty order in the given circumstances. On behalf of the assessee, reliance was placed on the ratio in the case of K.L. Mangal Sain [1977] 107 ITR 598 (All). Learned authorised representative, on behalf of the assessee, took the stand that where income was estimated by the Income-tax Officer resulting in some addition, penalty proceedings under Section 271(1)(c) could not be initiated. That position does not find support from the ratio in the case supra. In that case, the assessee was not found guilty of fraud or gross or wilful neglect whereas, in the case before us, the fraud or gross or wilful negligence is writ large as the assessee shifted its stand so often by reflecting the income on various occasions. The various stands taken with respect to returned income clearly indicate that the assessee was playing hide and seek with the Department. Thus, in our view, the assessee was clearly guilty of fraud or gross or wilful negligence in view of the unrebutted facts placed in the record. The burden was on the assessee to prove that what was shown in the return was correct on the basis of the record. The assessee, in the present case, has failed to prove that and thus reliance, in our view, is misplaced. Similarly, the assessee's reliance on the ratio in the case of Nawab and Bros. [1977] 107 ITR 681 (All) is also of no help because there the income was determined by applying a flat rate on the returned turnover whereas in the case before us, the income was estimated merely on the basis of some figures returned by the assessee. The difference in facts between the two situations is clear. Thus, the reliance placed by the assessee on those ratios, in our view, is of no help or consequence. In fact, on behalf of the Revenue, mention was made of the ratio in the case of Bihar State Co-operative Marketing Union Ltd. [1987] 163 ITR 450 (Patna) wherein the assessee filed a return showing income of Rs. 4,65,965 and thereafter filed a revised return showing loss of Rs. 1,00,415. The assessment was, however, computed on an income of Rs. 7,97,638 by making certain additions and disallowance of deductions claimed. Penalty of Rs. 86,500 was imposed. Penalty order was set aside by the Tribunal on two counts, firstly, that there was no mens rea for the concealment and that disallowances were made on estimate. The approach there of the Tribunal was not appreciated by the Hon'ble Patna High Court with the following observation (headnote) :
" Held, that the onus of establishing concealment in penalty proceedings was not upon the Revenue. The circumstances which might indicate that there was no failure on the part of the assessee to return the correct income had to be shown by the assessee. The Tribunal, therefore, erred in law in setting aside the penalty on the ground that the Department had not proved that the assessee had earned profits other than those shown in the books. Within the tax field, there was no room for bringing the rules of criminal law and insisting on mens rea or proof beyond all reasonable doubt. The Tribunal had to appreciate the facts keeping in view the obligation cast upon the assessee by the Explanation to Section 271(1)(c) of the Act."
12. A perusal of the above ratio clearly shows that there is no impropriety or illegality in initiating the proceedings where the income was estimated. It is also observed therein that the onus of establishing concealment in penalty proceedings was not upon the Revenue but in fact it was for the assessee to show that the correct income had been declared and that there was no concealment. In our view, the ratio is aptly relevant for determining the controversy at hand. The Revenue's stand in this respect is supported by the reasoning in this case. The Revenue's stand is further supported by the ratio laid down in the case of Hoshiarpur Express Transport Co. Ltd. 11986] 162 ITR 393 (P & H), wherein it was held that the finding given in the assessment proceedings was good evidence though not conclusive and penalty levied on that basis was valid. This ratio clearly supports the stand taken by the Revenue authorities in this case. The Revenue's stand also finds further support from the ratio in the case of Swamp Cold Storage and General Mills [1982] 136 ITR 435 (All) wherein it was observed that (headnote) : " the onus is on the assessee to prove that the omission to return the correct income was not due to any fraud or gross or wilful neglect on his part. The nature of proof is as in a civil suit and for the degree of proof necessary to dislodge the presumption, preponderance of probabilities of a case ought to be examined. The Explanation will apply even if the difference between the income returned and the assessed income is due to an estimate. " The case laws relied upon by the assessee is from the Hon'ble Allahabad High Court. This latter judgment of the same Hon'ble High Court offsets the effect of the ratio in the case relied upon by the assessee. In our view, and in the given circumstances, this case clearly establishes that the penalty was rightly imposed and correctly confirmed. Similar view is also available in the case of CIT v. M. Habibullah [1982] 136 ITR 716 (All).
13. In the light of the preceding paragraphs, we are clear that the assessee failed to discharge the burden cast on it to prove that what was declared by it was bona fide declared and was correct with reference to the record. It was also for the assessee to show that filing of various returns was justified and bona fide. The Income tax Officer, in the given circumstances, had no other option excepting resorting to the estimate, that he was further justified in coming to the conclusion that the difference between the returned income and the assessed income was clearly the subject-matter of concealment consciously attempted by the assessee. This gives the impression that there was a deliberate attempt on the part of the assessee to hoodwink the Department. In our view, thus, the penalty proceedings were rightly initiated and penalty was correctly imposed. Such action was very correctly confirmed by the learned Appellate Assistant Commissioner and, in his action, we see no error or omission. The same is confirmed.
14. The paper book has been considered.
15. In the result, the appeal is dismissed.
P.J. Goradia, Accountant Member
16. I have gone through the order passed by my learned brother. I could not persuade him to agree to my views, and, therefore, I pass this separate order.
17. The relevant facts in respect of the returns filed are stated in the order passed by my learned brother. The findings on the basis of which the assessment was completed are stated in the assessment order passed on March 10, 1984, the relevant portion of which reads as under :
"An affidavit of Shri Ram Chand, partner, has been filed stating that due to disputes amongst the partners, no business was done after June 30, 1976, and the business was, therefore, suspended. It is further stated that all the account books were with Shri Bhagwan Das, partner, who has expired on January 28, 1983. His death certificate has been filed. The reasons for non-production of account books have been explained in detail in letter dated March 10, 1983.
The assessee has filed trading and profit and loss account. It is noticed that the expenses have been shown on estimate basis. The trading account reveals a gross profit of Rs. 1,22,450 on sales of Rs. 25,53,970 yielding a gross profit rate of 4.7% as against 5.69% on sales of Rs. 18,87,316 of the last year- The reason for decline in gross profit rate is attributed to disputes amongst the partners. The assessee has produced only purchase and sale books but no other books have been produced in the absence of which it is not possible to verify the correctness of the results declared. I am, therefore, inclined to estimate the income of the assessee under Section 145 of the Income-tax Act.
Keeping in view the past history of the case and the fact that there were disputes amongst the partners which ultimately resulted in closure of business, I would estimate the income of the firm at Rs. 42,000 against Rs. 18,400 declared in the revised return.
The above findings together with the evidence are required to be appreciated on the basis of the amended law effective from April 1, 1976. It appears that the amended law is to some extent ignored while appreciating the facts of the case. Explanation 1 inserted in Section 271(1) with effect from April 1, 1976, by the Taxation Laws (Amendment) Act, 1975, reads as under :
"Explanation 1.-- Where in respect of any facts material to the computation of the total income of any person under this Act, --
(A) such person fails to offer an explanation or offers an explanation which is found by the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) to be false, or (B) such person offers an explanation which he is not able to substantiate, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of Clause (c) of this sub section, be deemed to represent the income in respect of which particulars have been concealed :
Provided that nothing contained in this Explanation shall apply to a case referred to in Clause (B) in respect of any amount added or disallowed as a result of the rejection of any explanation offered by such person, if such explanation is bona fide and all the facts relating to the same and material to the computation of his total income have been disclosed by him."
17. Considering the provisions contained in the Explanation referred to above, there is no doubt that an explanation was offered and the same was not found to be false. Besides, after offering an explanation, the assessee is also able to substantiate the same because the assessee has filed appropriate evidence by way of affidavit and other relevant material which are not disputed. In fact, from the assessments for subsequent assessment years, it is seen that not only the explanation is substantiated but the same is accepted and that is why no penalty proceedings were initiated on similar facts in subsequent assessment years. Considering the proviso to the Explanation, again it can reasonably be said that the explanation was bona fide. Therefore, there is no question of levy of penalty on the basis that the assessee filed inaccurate particulars of income. Considering the facts of the case, it is not possible to say, when the Assessing Officer invoking the proviso under Section 145(1) of the Act made an addition estimating the income on higher side, that the assessee offered inaccurate particulars of income. In my opinion, the penalty is required to be cancelled and therefore, the same is cancelled.
18. In the result, the appeal is allowed.
ORDER OF REFERENCE TO THIRD member P.J. Goradia
19. Because of difference, a reference is made for the opinion of the third Member on the following question :
"Whether, on the facts and in the circumstances of the case, the penalty of Rs. 10,214 levied under Section 271(1)(c) of the Act was required to be upheld ? "
20. The Hon'ble President is requested to do the needful in the matter.
ORDER OF THIRD MEMBER G. Krishnamurthy, President
21. There is a difference of opinion between the learned Members of Delhi Bench 'D' and the same related to the imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961.
22. The assessee in this appeal relating to the assessment year 1976-77 is a firm of four partners. It appears that some disputes arose between the partners as a consequence of which account books were retained by one of the partners for a long time. The other partners originally filed a return declaring nil income on July 28, 1980, but later on, a revised return was filed on March 26, 1981, declaring a total income of Rs. 40,400 on estimate basis. Thereafter this revised return was again revised reducing the total income to Rs. 18,400. At the time of assessment, the books of account were not produced but the purchase and sale vouchers were produced. The Income tax Officer could not verify from these purchase and sale vouchers as to whether the income disclosed finally at Rs. 18,400 was true or not. He estimated the income at Rs. 42,000 and completed the assessment and simultaneously initiated penalty proceedings for concealment of income and eventually levied a penalty of Rs. 10,214 under Section 271(1)(c) of the Income-tax Act. It will be apposite to reproduce the observations of the Income-tax Officer in coming to the conclusion that there was concealment of income justifying the imposition of penalty :
" Under these circumstances, I am left with no alternative but to complete the penalty proceedings on the basis of the material available on record. The assessee filed the return declaring a total income of Rs. 18,400 and in the absence of books of account it was estimated at Rs. 42,000. The difference of Rs. 23,600 (Rs. 42,000 - Rs. 18,400) is to be treated as income from undisclosed sources in respect of which the assessee has not furnished any explanation. I am satisfied that the assessee has furnished inaccurate particulars of income to the extent of Rs. 23,600 and the penalty provisions under Section 271(1)(c) are attracted in this case. I, therefore, impose a penalty of Rs. 10,214 being 100% of the tax sought to be evaded which is calculated as under."
23. This penalty was confirmed on appeal by the first appellate authority.
24. When the matter came on second appeal before the Tribunal, the learned Judicial Member held that penalty was rightly imposed but the learned Accountant Member held that there was no justification at all for the imposition of penalty. Thus a difference of opinion arose between the Members and the following point was referred to me for my opinion :
" Whether, on the facts and in the circumstances of the case, the penalty of Rs. 10,214 levied under Section 271(1)(c) of the Act was required to be upheld ? "
25. As will be seen from a brief resume of the facts that gave rise to the present controversy, the penalty was imposed because in the finally revised return, the income was estimated at Rs. 18,400 as against the finally determined income again on estimate basis at Rs. 42,000. The point to be noted is that, at no point of time, the assessee based the return of admitted income on the books of account. In the first return, he disclosed nil income because of disputes between the partners. In the first revised return, the income was estimated at Rs. 40,400 on the basis of the income assessed in the past. The assessments made in the past were only the basis for estimating the income but not the books of account. The books of account were not available at any point of time. Subsequently, when the assessee came in possession of the purchase and sale vouchers, he found that the turnover this year was Rs. 25,05,970 and, on that basis, he estimated the net profit at 0.72% again based upon the previous assessments. The Income-tax Officer did not accept this net rate of profit. He very rightly said that, in the absence of closed books of account, the estimate of profit could not be relied upon. He, therefore, estimated the income at Rs. 42,000 based upon the previous history.
26. Now, how can it be said that, when the income was arrived at on the basis of estimate, the assessee was guilty of concealment of income or furnishing of inaccurate particulars thereof or was unable to substantiate the income returned. The assessee filed a trading and profit and loss account before the Income-tax Officer and the trading account filed showed a small marginal decline of gross profit from 5.69% in the previous year to 4.7% and it was explained that that marginal decline was due to the disputes between the partners. The Income tax Officer estimated the income at Rs; 42,000 observing that, keeping in view the past history of the case and the fact that, on account of disputes, the business was ultimately closed. How can it be said that, on these facts, the assessee had concealed the particulars of its income so as to attract the penal provisions of Section 271(1)(c) ? Nothing was shown in the assessment order to justify the conclusion that there was concealment of income. The assessee was able to substantiate the filing of the second revised return disclosing the income at Rs. 18,400 by pointing to the fact that, on account of the disputes between the partners, there was a decline in the margin of profit and, therefore, the income could not be higher than Rs. 18,400. In any case, it cannot be as high as in the past. The Income-tax Officer accepted the fact that, on account of the disputes between the partners, the business was ultimately closed. It is also very pertinent to note that, in the next assessment year 1977-78, the turnover was only Rs. 9,12,000 and the income declared was Rs. 5,802, which yielded a net profit rate of 0.65%. Assessment was made on Rs. 8,000. As against that position, in the year under appeal, the net profit estimated was 0.72% which yielded an income of Rs. 18,400 as against which the income was estimated at Rs. 42,000, giving a rate of about 1.5%, which was the rate of net profit in the previous year. When the business was in its heyday, the rate of net profit was 2.6% in the assessment year 1974-75 on a turnover of Rs. 20 lakhs yielding an income of Rs. 73,000, which was accepted by the department. In 1975-76, on a turnover of Rs. 18 lakhs, the income declared was Rs. 48,635, which again was accepted by making a very marginal adjustment of about Rs. 1,000. Thus, when the past and future history was an accepted history, the assessee is entitled to believe that since the disputes among the partners had diminished the profitability to a great extent, that position would be accepted. The Income-tax Officer arbitrarily raised the income to Rs. 42,000 and made the assessment in the status of a registered firm as a consequence of which there is no tax payable by the firm except for a meagre sum of Rs. 2,231. So, the assessee did not file an appeal because of the very meagre tax involved but that does not mean that the assessee had accepted the income as correct. In a case where the total income is only Rs. 42,000 even on estimate basis and the tax payable thereon is hardly Rs. 2,200 and perhaps no tax payable by the partners, the imposition of penalty for concealment of income at Rs. 10,214 is much too high to be countenanced as reasonable and fair by holding that the assessee had a desire or inclination to suppress the income.
27. Having regard to all these circumstances, I am of the opinion that the levy of penalty in this case is totally unjust and uncalled for. I agree with the view expressed by the learned Accountant Member in his order that this is not a case where the penalty has been rightly imposed.
28. There is another important point to be borne in mind, viz., the explanation offered by the assessee must be found to be false before the penal provisions of Section 271(1)(c) as amended with effect from April 1, 1976, are applicable. As I have endeavoured to point out above, the falsity of the explanation was not proved or not even attempted to be proved. I, therefore, agree with the view expressed by the learned Accountant Member that, when the explanation offered by the assessee was not found to be false, the difference between the income returned and the income estimated cannot be regarded as concealed income.
29. The matter will now go before the regular Bench for a decision according to the majority opinion.