Gauhati High Court
Income-Tax Officer vs Akshay Bhandar. on 31 October, 1989
Equivalent citations: [1990]33ITD13(GAU)
ORDER
Per Egbert Singh, A. M. - The appeal is by the revenue which is directed against the order of the CIT (A) by which he has deleted Rs. 32,208 being penalty imposed by the ITO under section 271(1)(c).
2. In the assessment order, the ITO has narrated the various circumstances of the case and the facts along with the materials to show that the assessee has shown to have made cash receipts of Rs. 24,402 from M/s Biswas Bros. of Dharmanagar, Tripura, on 15-3-1988 which was disclosed as cash sales. On verification, the ITO obtained information from the ITO, Agartala, assessing M/s Biswas Bros. of Dharmanagar that the said firm through Shri P. K. Biswas, Managing Partner, had denied to have made payment in cash on 15-3-1977 on account of purchase of 45 bundles of G. I. sheets from this assessee. Such information was furnished to the assessee to enable the assessee to produce any material to support the claim that there was cash sales on 15-3-1977 to the abovementioned Dharmanagar party. The assessee took time again and again. In the assessment order, it is seen that the assessee vehemently urged that there was cash sale to the above party as per its books regularly maintained by it and the assessee also contended that it would produce persons and other materials to show that there were cash sales as such. But at the later stage, this assessee on 15-12-1979 wrote to the ITO amongst other things, stating that Rs. 24,250 was received in cash, but as the same was not believed by the ITO, the assessee had no further evidence to produce and requested the ITO to close the matter without burdening the assessee with onerous obligation of adducing further evidence in addition to what had already been produced. The assessee further requested the assessee to complete the assessment according to the provisions of the Act and was ready to pay extra tax.
3. In the assessment order, the ITO mentioned that it was apparent that the assessee was not willing to produce evidence etc. as stated by Shri Ashik Kumar Banik earlier on behalf of the assessee. The assessee also wrote to the ITO that it was not in a position to produce certain person including some employees to support the earlier contention of the assessee. At this stage, the assessee wrote to the ITO that it did not like to insist on the ITO to give the assessee further opportunity to produce those witness mentioned by one of the partners of the firm and the assessee rather should be exempted from production of such witnesses in support of the deposition made by the partner earlier. The assessee, therefore, requested the ITO to treat the above sum as the firms income for the assessment year 1977-78 and would have no objection to pay extra tax leviable for such inclusion of such income along with the income already assessed in the original assessment. It may be mentioned here that this was a case of re-assessment under section 147(a) which was initiated by the ITO on receipt of intimation from the ITO, Agartala. The assessee also requested the ITO to exempt the assessee from penal proceedings.
4. Meanwhile, the ITO had already initiated proceedings under section 271(1)(c). The assessment was earlier completed on the total income of Rs. 4,59,780 as made under section 143(3). after the re-assessment was made, which is the subject matter of this appeal, the income of the assessee was at Rs. 4,83,670. The assessee contended that the proceedings were not proper nor lawful merely on the basis that the cash sale made on 15-3-1977 was simply treated as concealed income of the assessee without properly appreciating the entries made in the account books of the assessee which have been maintained in course of the ordinary business of the assessee. It was stated that the firm maintained account books in the ordinary course of the business and as such the sale made to the customer Shri Prafulla Chandra Biswas in cash was duly accounted for in the books for the sale of 45 bundles of G. C. I. sheets on 15-3-1977. It was submitted that the statement of Shri Prafulla Ch. Biswas before the ITO, Agartala, that the purchase was made on credit was not at all corroborated with any evidence whatsoever and such self-statement of cannot be used against the assessee conclusively. Amongst other things, it was urged by the assessee before the ITO that the penal proceedings were highly unjustified and unlawful as the assessee firm had to agree to the assessment of the above amount as has been made and at the time when the existence of the firms business was very much threatened in the disturbed condition prevailing in the State and in view of the desires of the assessee to see through peace and for maintaining good relationship with its customers. It was also submitted by the assessee that the assessment of the above amount did not tantamount to admission of any particulars of income concealed and as such no penalty could be imposed on the firm.
5. The ITO mentioned and considered the explanation of the assessee and the statement of the purchaser Shri P. K. Biswas who has disproved the claim of the assessee that the sales were made in cash on 15-3-1977. The ITO inferred that the assessees attempt was to convert the credit sale to camouflage introduction of secret funds in the books of account, which attracted the provisions of section 271(1)(c). The ITO found that the entries in the books of the assessee had been proved to be incorrect and false on verification and, therefore, the assessee has furnished inaccurate particulars as contemplated by section 271(1)(c).
6. The ITO also considered the contention of the assessee that the assessee came forward and offered the amount for assessment and, therefore, it could not be deemed to be the concealed income as agreed to by the assessee. The ITO observed that attempt to conceal the income was detected and proved by the department and the fact that the assessee came forward and offered the amount for assessment would not take away the point out of the above section. The ITO, therefore, held that this is a case for imposition of penalty under section 271(1)(c). He worked out the tax sought to be evaded at Rs. 16,104. On the basis of the working of the assessing officer, a penalty of Rs. 32,208 was imposed.
7. The assessee took up the matter before the CIT (A) who reproduced the various relevant portion of the assessment order as well as the written submissions of the assessee made before the CIT (A). Thereafter, the CIT (A) noted that the assessee sold goods at Rs. 5,052.78 on credit to M/s. Biswas Bros. of Dharmanagar and the goods were despatched by Rail, the assessee being the consignor and the Dharmanagar party as the consignee. He also noted that in respect of the cash sales of Rs. 24,250, effected on 15-3-1977, the goods were despatched by M/s. Biswas Bros., Dharmanagar and he was both consignor and consignee. The CIT (A) observed that there is sufficient force in the submission of the assessee that in case the goods worth Rs. 24,250 were sold on credit, the same could have been despatched by the assessee along with other goods being the consignor and not by M/s. Biswas Bors., who happened to be both the consignor and consignee in respect of goods sold worth Rs. 24,250. The CIT (A) observed that on the facts of the case and in view of the decision of the Honble Bombay High Court in the case of CIT v. Balraj Sahani [1979] 119 ITR 36 which facts were identical with those of the assessee and in view of the judgment of the Honble Gauhati High Court in the case of CIT v. Gajanand Shyamlal [1978] 111 ITR 816, the CIT (A) concluded that the penalty was unjustified and the same was cancelled. Hence, this appeal by the revenue.
8. We have heard both the sides at length and we have gone through the orders of the authorities below for our consideration along with the authorities cited by the parties before us. On behalf of the revenue, it is submitted that in the findings of the ITO in the assessment order as well as in the penalty order, there were ample materials and evidence to show that the assessee did conceal its income and had in fact furnished inaccurate particulars and, therefore, the penalty provisions have been correctly applied by the ITO which was wrongly cancelled by the CIT (A) without considering the materials as well as the principles of law involved. On behalf of the revenue, reference is made to a decision of the Honble madras High Court in the case of Rathnam & Co. v. IAC [1980] 124 ITR 376 in which on the facts of that case, the penalty imposed under section 271(1)(c) was sustained after considering the point that the assessee had agreed to the addition to the low gross profit disclosed and, therefore, there was concealment as the penalty provisions did not depend on consent or otherwise of the assessee. It is, therefore, pressed by the learned Departmental Representative that there was absolutely no justification for the CIT (A) to cancel the penalty order on the basis of those decisions relied on by the CIT (A), without even considering that the facts and circumstances of those decided cases which were different. It is urged, therefore, that the order of penalty may be restored.
9. The assessees learned counsel, on the other hand, supports the order of the CIT (A) stressing the point that the ratio of the decisions relied on by the CIT (A) in his order would equally be applicable to the facts of the instant case. According to the assessee, agreeing to make addition would not tantamount to concealment now would attract the penal provisions. It is submitted that surrendering of the above amount was made in good faith and in view of the fact that at that stage, the assessee could not lead evidence or witnesses, in the circumstances stated. On behalf of the assessee, reliance is placed on the decision of the Honble Punjab & Haryana High Court in the case of Gumani Ram Siri Ram v. CIT [1972] 85 ITR 67 in which amongst other things, it was held therefore penalty was imposed, the ITO had to consider the entirety of the circumstances of the case to show that the assessee had consciously concealed the particulars or had deliberately furnished inaccurate particulars of income. It was held by the Honble High Court that penalty cannot be imposed merely because the cash deposits were surrendered by the assessee unless there was material on the record to show that the surrendered item was income of the assessee. Further reliance is placed on the decision of the Honble Andhra Pradesh High Court in the case as reported in which on the facts of that case it was held that penalty was not justified. It was noted that agreement by the assessee to assessment at higher figure than the returned income is not sufficient for levy of penalty and there was no evidence of concealment of income and as such no penalty can be imposed. The assessees learned counsel also placed reliance on the decision of the Honble Allahabad High Court in the case of CIT v. Mansa Ram & Sons [1977] 106 ITR 307, in which on the facts of that case, it was held that penalty was not valid. The facts of that case were that cash credit was surrendered as desired by the ITO provided penalty would not be levied. Thus, it can be seen in that Allahabad case that the assessee surrendered such amount to assessment as desired by the ITO, on certain condition which apparently is not the case here. The assessee also has placed reliance on the decision of the same Honble High Court in the case of Addl. CIT v. Kishan Singh Chand [1977] 106 ITR 534 in which a similar situation has arisen as mentioned above and it was observed that the assessee agreed to higher rate of profit on the undertaking given by the ITO that he would not impose any penalty. It was observed that even in the absence of any material on record, one has to give regard to normal human conduct and it was reasonable that the assessee would not agree to an enhanced assessment unless he had been motivated by a cogent reason.
10. The assessees learned counsel has also placed reliance on the decision in the case of CIT v. Narang & Co. [1975] 98 ITR 462 as decided by the Honble Delhi High Court, which the facts were different from those of the present case before us and in which the penalty order was not sustained as the Appellate Tribunal accepted the explanation of the assessee in the penalty proceedings and as the assessee had not received back the goods and there could be no mala fide intention to suppress the value of the goods from the closing stock. Further reference is made to a decision of the Honble Mysore High Court in the case of D. Halappa Sons v. CIT [1974] 95 ITR 542 in which the provisions of the Explanation to section 271(1)(c) as applicable for that year concerned was dealt with. It was held that no penalty could be imposed merely on the concession of the assessee or his representative unless the facts justified such levy. In the case of CIT v. Suchitra Sen [1982] 135 ITR 797 (Cal.) on the facts of that case, it was held that findings in the assessment proceedings were not conclusive but, however, such findings are good evidence. It was noted that the amount was assessed as assessees income from undisclosed sources. But in the penalty proceedings as the Tribunal found that there was no evidence to show that the assessee had received amounts, there was no evidence to establish that the amount of expenditure was out of unaccounted receipts of the assessee. The penalty on the facts of that case was cancelled. It is urged vehemently by the assessees learned counsel that the CIT (A) has properly accepted the facts of the case and cancelled the order of penalty. It is contended that apart from the falsity of the explanation, there was no material for the ITO to come to the conclusion. In the present case that there was no cash sales on 15-3-1977 as alleged by the Dharmanagar party that the payment was not made on that date but on a much later date. It is urged that if the facts of the present case are properly appreciated keeping in view the provisions of law on the point, the order of the CIT (A) requires to be sustained.
11. We have gone through all the various facts and materials placed before us for our consideration. We find that the facts of the present case are different and distinguishable from those cases cited before us on behalf of the assessee. In the present case, the assessee did not surrender such amount to be assessed by the ITO on some understanding or misunderstanding of the ITOs action. In fact, the ITO till the last stage asked the assessee to produce those witnesses which the assessee had promised to produce and also to produce other materials or facts to support the claim of the assessee that there was cash sales and cash receipts on that date out of which the assessee might have made payments in cash to the other parties for expenditure, like salary etc. From the deposition of the Dharmanagar party, i.e Shri P. L. Biswas, it is seen that he had been at Agartala itself on that date and had never been to Guwahati so as to make cash payment to this assessee. Here, there is no question of believing or disbelieving the statement of the assessee or the statement of the Dharmanagar party. The entries in the books of account of the assessee have to be taken prima facie as correct. But in the present case, the alleged payer had categorically stated in a statement under section 131 before the ITO that no cash payment was made by his firm to this assessee on that date, as the order was placed with the assessee for supply of 45 bundles of GIC sheets etc. and on receipt of the credit memo at a later stage, the amount was paid on 5-4-1977 to this assessee, when that party found that the goods were already received by his firm and entered in the stock register. It was pointed out that the credit memo sent by the assessee were received at Dharmanagar and as per postal mark on the cover, the papers were registered at the Fancy Bazar Post Office on 16-3-1977. We find no contradiction from the assessee to this fact nor there was any material to point to a different direction. If the assessee had actually, sold those items and received payment in cash on that very date, i. e. on 15-3-1977, then there was no necessity to issue credit memos for cash sales and which were sent to the assessee at Dharmanagar through registered post as stated by the Dharmanagar Party. It is seen that the Dharmanagar party received two credit memos for Rs. 1,330 and Rs. 3,722.78 for the goods supplied by the assessee. But it was stated that the Dharmanagar party did not receive any credit memo for supply of 45 bundles of GIC sheets and instead he received kutcha voucher from this assessee wherein the cost of the goods including the carriage charges were mentioned. It was stated in that deposition that though it was not the practice of that party to pay the amount without any memo, the amount was paid on 5-4-1977 to the assessee, when it was found that the goods have already been received by the Dharmanagar party and entered the same in the stock register on 23-3-1977. It was confirmed by the Dharmanagar party and entered the same in the stock register on 23-3-1977. It was confirmed by the Dharmanagar party that on 15-3-1977 no cash of Rs. 24,250 was paid to the assessee for the purchase of 45 bundles of GIC sheets and no cash memo was issued to that firm or in the name of Shri P. C. Biswas by the assessee.
12. It is seen that the ITO gave this information and other details to the assessee to rebut the same and to examine or cross-examine any witness. It is seen that the deposition of the managing partner of M/s Biswas & Bros., Dharmanagar, were made available to the assessee. It is seen that vide his letter dated 6-11-1979, the ITO asked the representative of the assessee to produce witness and other persons along with any other material to support the claim of the assessee that the Managing partner of the Dharmanagar party came to the shop of the assessee at Gauhati and made the cash payment as claimed. But the assessee sought time from the ITO again and again. At a later stage, the assessee vide his letter dated 15-12-1979 had stated that they had no further evidence to produce and requested the ITO to close the matter without burdening the assessee to onerous obligation of its adducing further evidence and the assessee had further requested the ITO to complete the assessment according to the provisions of the Act and was ready to pay the extra tax. In other words, as pointed out by the ITO, the assessee came and offered the above amount to be added to the income nor on the assessees own accord. It is seen that such surrender was not voluntary or bona fide. The assessee obviously found that the materials before the ITO were overwhelmingly against the assessee and, therefore, wrote to the ITO on 15-12-1979 requesting him to make the addition and not to burden the assessee with onerous obligation for producing evidence etc. The assessee had also stated that it did not want to be given further opportunity to produce the witnesses and rather the assessee should be exempted from producing any such witnesses. It was specifically stated by the assessee that the above sum be treated as the firms income for the assessment year 1977-78 and had no objection to pay extra tax on the inclusion of such income. Of course, the assessee in that letter requested the ITO to exempt the assessee from penalty proceedings.
13. As observed by the Honble Madras High Court in the case of Rathnam & Co. (supra), applicability of penal provisions does not depend on consent or otherwise of the assessee. It is open to any assessee to surrender any amount for addition to the assessment either voluntarily or persuasively. But as far as the penalty provisions are concerned, we are of the opinion that the ITO would not have any jurisdiction to enter into a contract with the assessee to impose or not to impose any penalty, as imposition of penalty or otherwise depends on the facts and circumstances of the case of a particular situation for which there are guiding principles enunciated by different courts.
14. In the present case, we find that the ITO had been asking the assessee to produce those materials or witnesses to support the claim of the assessee. But in spite of sufficient opportunity, the assessee declined such opportunity and came round and requested the ITO to treat the above sum of Rs. 24,250 as assessees income for the year under consideration. We also find that there is no understanding or misunderstanding between the assessee and the ITO before the surrender was made. In fact, the assessee came up and made the above request to the ITO after he was cornered. In fact, the assessee declined specifically to produce those parties and insisted the ITO not to give further opportunity to the assessee to produce those witnesses etc.
15. The facts of the present case were different and distinguishable from those of the Gajanand Shyamlal case (supra) relied on by the CIT (A) in cancelling the penalty in which on the facts of that case, it was found that there was no positive evidence to show that the income had been earned not in the earlier years but in the assessment year concerned and that there was also no evidence to show that it pertained to the concealed income of the assessee firm and not of the partners and the penalty was cancelled. In that decided case the ITO had not accepted the contention of that assessee to spread over certain income over some years. It was observed by the Honble High Court that the assessee Gajanand Shyamlal surrendered amounts for taxation because that assessee was unable to prove the genuineness of the loans and could not conclusively prove these credits and, therefore, the assessee submitted that these amounts might be subject to tax. The Appellate Tribunal found that there was no admission as such that the assessee concealed its income. It was also observed by the Honble High Court that the ITO may charge an income offered by the assessee to be taxed as its income, but such an offer of cash credit to be taxed under section 68 made by the assessee, is by itself not sufficient to lead to the presumption that the assessee admitted that such credit was its income for the relevant previous years and that he had concealed that income. It is noticed that in the case of Gajanand Shyamlal (supra) the assessee vide letter dated 29-1-1979 has stated that since it could not conclusively prove those credits, the assessee liked to be taxed for those amounts. But the facts of the present case before us is that the assessee categorically stated before the ITO that the books had been maintained in a regular course of business and that there was cash sales on that date to the Dharmanagar party and in fact time was given by the ITO to produce those materials and witnesses which the assessee wanted to produce. But when the ITO insisted of production of those materials, etc., the assessee resiled back from the previous stand and made the above request to the ITO. Thus, it could be seen fairly that had the ITO accepted the first contention or explanation of the assessee, then the above amount of Rs. 24.250 would have escaped assessment for the year, as mentioned earlier. Such request of the assessee cannot be said to be voluntary or bona fide as the request had been made obviously when the assessee was in a tight position. The assessee in the present case could not even show that the cash was actually received on that date as evidenced by the books and had actually made the disbursement out of such sale proceeds. When the ITO asked the assessee to place materials in support of such contentions, the assessee did not offer any explanation but made request to add the above amount as income of the assessee for the year. Thus, the assessee in the present case, in the said letter to the ITO, had requested him to treat the amount of Rs. 24,250 as the firms income for the assessment year 1977-78.
16. In the case of Gajanand Shyamlal (supra) it was noted that the IAC who imposed the penalty, committed an error in law and logic while coming to the conclusion that there was admission on the part of the assessee regarding the amounts in question to be his income for the year and that he had concealed it. it was pointed out that the Tribunal detected legal and logical infirmity in the finding of the IAC and, therefore, the Tribunal came to the finding that the department failed to prove that the amount in question was the income of the assessee or that the assessee concealed such income. In the present case before us, the assessee vide his letter referred to earlier, did admit that Rs. 24,250 be treated as the firms income for the assessment year 1977-78. The ITO did not make any further inference or conclusion in view of the direct and categorical attempt on the part of the assessee before the ITO.
17. Thus, from the narration of the facts and the findings in the present case, we find that the facts of the present case before us are different and distinguishable from those of Gajanand Shyamlals case (supra) and, therefore, we are of the opinion that the CIT (A) went wrong in applying the ratio of that decision which has been given under different facts and circumstances of that case. In this connection, it would be useful to refer to a decision of the Honble Supreme Court in the case of Ambica Quarry Works v. State of Gujarat AIR 1987 SC 1073 in which on the facts and in the context of that case, it was observed by the Honble Supreme Court that a ratio of a decision must be understood in the background of the facts of that case. It was also observed that it has been stated long back that a case is only an authority for what it actually decides and not what logically follows from it.
18. The assessment year involved is 1977-78. One has to take into account the provisions of the Explanation to section 271(1)(c) in which Explanation 1 provides that for the purpose of clause (c) of section 271(1), would be attracted if such person offers an explanation which he has not been able to substantiate, then the amount added or disallowed in computing the total income of such person, shall be deemed to be the income in respect of which, the particulars have been concealed. But it is seen that the authorities below have not considering the provisions of the Explanation as amended and as applicable to the assessee for the year under consideration. In such a situation, the Appellate Tribunal has the obligation to take that provision of the law into consideration. In this connection, it would be useful to refer to a decision of the Honble Andhra Pradesh High Court in the case of CIT v. Chandulal [1985] 152 ITR 238/20 Taxman 111 in which on the facts of that case, it was noticed that the Appellate Tribunal had not considered whether the Explanation to section 271(1)(c) was applicable to the facts of the case. Accordingly, the matter was remanded to the Tribunal as directed by the Honble High Court. Similar is the view of the Honble M. P. High Court in the case of Sayabati Sharma [1982] 12 TLR 165.
19. In view of the above provisions. The assessee originally explained that there was cash sales on the aforesaid date and as such he had the cash sale proceeds with it. The assessee insisted that was the correct position as per the books regularly maintained by it. The ITO, on the other hand, obtained information from the counterpart of Agartala that the Dharmanagar party denied to have made cash payment on that date as shown by the assessee in its cash book as the purchase of 45 bundles of GIC sheets were made on credit for which credit memo was issued by the assessee through registered post which was received in due course by the Dharmanagar party. The payment made was after the alleged date of cash sale as opposed to the entries in the books regularly maintained by the assessee. That apart and as has been mentioned earlier, the ITO did ask the assessee to explain the position and sufficient time was given. The assessee at a later stage came up with a plea that the ITO need not give opportunity to the assessee to produce witnesses or materials in support of the contention and has requested the ITO to treat the above amount as income of the assessee for the year under consideration. This apparently was done after the assessee found itself in a tight corner. Thus, the assessee has not been able to substantiate the explanation which was offered before the ITO. In fact, as indicated earlier, when there has been a cash sale, there was no question of issuing credit memo to the Dharmanagar party who made payments subsequently. Thus from the narration above, it can be seen that the assessee has not been able to discharge the onus of proof which lay on it. The irresistible conclusion is that the assessee has concealed the particulars of its income and the penalty order was properly passed by the ITO on the facts and in the circumstances of the case.
20. It may be mentioned that in the earlier preceding paragraph, we have repeatedly stated that the assessee requested the ITO to treat the above amount of Rs. 24,250 as income of the assessee for the assessment year 1977-78, on the basis it had no further evidence to produce and requested the ITO also not to give further opportunity to produce witnesses in support of the earlier contentions. In other words, the assessee has taken the pleading that the above amount was the income of the assessee for the assessment year 1977-78. That pleading of the assessee is binding. Of course, we have to take the entire pleading as a whole keeping in view the decision of the Honble Supreme Court in the case of Choudhary Sahu v. State of Bihar AIR 1982 SC 98 and also in another decision in the case of Mahendra Manilal Nanavati v. Sushila Mahendra Nanavati AIR 1965 SC 364 as decided by the Honble Supreme Court. A similar view was expressed by the Honble Supreme Court yet in another case of Nagindas Ramdas v. Dalpatram Iccharam alias Brijram AIR 1974 SC 471. Since the assessee had admitted that the income related to the assessment year 1977-78, there was nothing for the ITO to prove or disprove the claim of the assessee in the circumstances. Of course, as mentioned earlier, the assessee has written to the ITO to exempt the assessee from penalty proceedings.
This request for exemption from penalty proceeding has not been made a condition for the assessee for offering of the above amount to tax. Request for exemption of the penalty proceedings is an independent and a separate request of the assessee. There is no live link between the two. Even otherwise, as mentioned by us earlier, the ITO is not entitled to make a contract with an assessee to initiate or not to initiate penalty proceedings as such proceedings depend entirely on the facts of each case on its merits. That apart from the contention of the assessees letter reproduced by the ITO in the order, it is seen that the above request of the assessee for taxation of the above sum, was not a conditional one that no penalty proceedings would be initiated.
21. That apart in the slightly similar situation in the case of Chuhadmal Takanmal v. CIT [1986] 27 Taxman 451/ [1987] 166 ITR 12, the Honble Madhya Pradesh High Court sustained the penalty under section 271(1)(c) as it was found that no evidence was produced by the assessee to prove that the watches seized by the customs did not belong to the assessee. The penalty was imposed on the value of the watches includible in the total income of the assessee. It was noted at page 15 that the assessee has not taken any step to disprove the fact that at the relevant time, the wrist watches were not seized from his possession. Of course, in that decision, the Honble High Court considered the applicability of the Explanation to the above section as it stood relevant to the assessment year concerned, i. e., 1974-75 and it was observed on the facts of that case that the burden of proof was on the assessee which he failed to discharge despite sufficient opportunities being afforded to him. That decision in the case of Chuharmal v. CIT [1988] 172 ITR 250/38 Taxman 190 in which it was observed amongst other things that the assessee was given many opportunities to place his materials before the ITO. But the assessee sought for time and ultimately submitted a general denial. Later on, the counsel for that petitioner stated that the petitioner did not want to avail of the opportunity of personal hearing or even to cross examine the witnesses in whose presence the panchanama was made at the time of the seizure. Accordingly, the penalty proceedings were initiated under section 271(1)(c).
22. As mentioned by us in the earlier preceding paragraph, the assessee after being given sufficient time did not want to avail of the opportunities given by the ITO and in fact requested the ITO not to insist on the assessee to produce those witnesses on which the assessee sought reliance. Thus, the assessee had failed to substantiate the claim that the cash sales shown on the concerned date for the year under consideration was not the cash sale proceeds as such but the concealed income of the assessee.
23. In view of our discussions above, the order of the CIT (A) impugned before us cannot be sustained on facts. The order of the CIT (A) is, therefore, reversed and that of the ITO restored.
24. In the result, the appeal by the revenue is allowed.