Income Tax Appellate Tribunal - Jaipur
Parasmal Parekh vs Assistant Commissioner Of Income-Tax on 9 October, 1995
Equivalent citations: [1996]58ITD34(JP)
ORDER
Pradeep Parikh, Accountant Member
1. The assessee is in appeal before us against the order of the learned CIT(A) dated 22-1-1990 for assessment year 1985-86. Though apparently there are four grounds, actually there is only one issue and it relates to the levy of penalt/of Rs. 70,000 under Section 271(1)(c) of the Income-tax Act, 1961 (the net). Rest of the grounds are mere submissions and/or arguments and are dealt with at the appropriate places in this order.
2. The facts : The assessee M/s Parasmal Parekh, E-37, Shastri Nagar, Jodhpur was a registered firm engaged in contract work relating to Government Departments. It had secured a contract from the Improvement Trust, Jodhpur for the construction of Barkatullah Khan Stadium, Jodhpur. It came into existence in the assessment year 1984-85 under Deed dated 30-10-1982 of Partnership. Its partners were S/Shri Parasmal Parekh, Kewalchand Jain and Banwar Ram. The firm is said to have been dissolved with effect from 1-5-1985. For the assessment year 1985-86 in question there were three accountants (Munims) in the said firm, namely, S/Shri Nemichand Sharma, Satya Narain Sharma and Rikhabmal Nahar. Out of these Shri Rikhabmal Nahar, who was said to be the main Munim died two days after the Dewali, 1985. For the assessment year in question, on gross receipts of Rs. 51,56,471, the assessee declared a net profit of Rs. 4,93,945 giving a rate of 9.5% as against 10% applied in the preceding assessment year 1984-85. The ITO noticed that as against the total payment/receipts of Rs. 51,56,471, the assessee had claimed Rs. 10,27,621 as wages which came to roughly 1/5th. The labour expenses had been claimed on the basis of muster rolls for the period 14-5-1983 to 28-2-1984. The ITO issued notices under Section 143(2)/142(1) requiring the assessee to produce evidence in support of the return filed and to produce the books of account on 16-4-1986. On the said date the books of account were produced before the ITO and taking the view that they were faked, they were impounded under Section 131. The books so impounded also included the muster rolls of labourers. The ITO noticed that thumb impressions of some persons were repeated again and again at a number of places. Thereafter, on 18-4-1986 the ITO referred the matter for report of the Finger Print Expert. The report dated 23-7-1986 of the Director, Fingure Print Bureau, Calcutta stated that one muster roll pertaining to Barkatullah Khan Stadium dated 14-5-1983 (Sheet Nos. 79, 80 & 81) had 58 names in Hindi against which the finger prints marked showed that:-
(i) 32 finger prints were identical to each other,
(ii) 17 finger prints were identical to each other, and
(iii) 9 finger prints were not clear and were smudged and therefore, unfit for comparison.
On 30-9-1986 the ITO examined the assessee firm's Partners S/Shri Parasmal Parekh and Kewalchand Jain. The statement of the Munim Shri Satyanarain Sharma was recorded on 9-10-1986 and the second statement of Shri Nemichand Sharma was recorded on 21 -10-1986. The second statement of the assessee firm's partner Sh. Parasmal Parekh was recorded on 17-11-1986 and thereafter the statements of other partner S/Shri Kewalchand Jain and Sanwalram were recorded on 3-12-1986 and 4-12-1986. Earlier the ITO had required the assessee, vide notice dated 9-10-1986 to produce some of the labourers, namely, S/Shri Vyas, Satyaraj, Hasari, Baldeo, Naurath, Khetaram, Shivlal, Devilal, Ramlal, Vadera and Pema. However, vide its reply dated 15-10-1986 the assessee expressed its inability to produce them on the ground that the execution of the work had been suspended and that the labourers had migrated to the other sites of work, the labourers being casual and migratory. The ITO took the view that only three labourers affixed their thumb impressions against the names of 58. According to him the expenses under the head "Wages" were bogus and inflated. He also found that though the assessee-firm did not own any vehicle, expenditure debited for diesel was Rs. 1,03,037, expenditure on transportation was shown as Rs. 1,26,000 and expenditure for soil carrying was shown at Rs. 2,50,006. He was of the view that barring purchase of materials, it appeared that the account books were cooked up solely for income-tax purposes. He further took the view that the diary on the basis of which muster rolls were prepared and which was a contemporaneous record, had been withheld from the Department and forged vouchers were produced. The non-production of labourers as mentioned above was taken by the ITO to prove that the wage bills had been considerably inflated and fictitious names of wage earners added and also false disbursement shown and claimed. He held that the account books did not reflect the correct state of affairs and that muster rolls and vouchers and payments included forged entries and that expenditure had been inflated. He observed that the assessee had not given any cogent explanation for the falsification of accounts. The ITO also observed that the scrutiny of accounts showed that under the head "Advertisement Expenses", "Travelling Expenses", "Transportation Expenses", "Donations" had either been inflated or no vouchers were available at all. On 5-1-1987 the assessee's counsel Shri S.L. Choudhary attended before the ITO and gave the following letter :-
Before the Income-tax Officer, A - Ward, Jodhpur.
In the matter of M/s. Parasrnal Parekh & Co.
Assessment year 1985-86.
Sir, Without prejudice to any penal action, the assessee agrees to an addition of Rs. One lakh to the declared income just to purchase peace and to avoid harassment in procrastinated litigation and subject to the averment that such amount neither represents concealed income of the assessee under Section 271(1)(c) nor in any manner a wilful attempt to evade tax or penalty by making any false entry in the books of accounts to the knowledge of the partners of the firm as envisaged under Section 276C.
5-1 -1987 Sohan Lal Choudhary Advocate for Assessee On the same day another letter was also given by S.M. Jangid, CA, representing the partner Shri Sanwalram. The letter read as follows :-
5-1-1987 The Income-tax Officer, A - Ward, Jodhpur.
Re : Sh. Sanwal Ram, Jodhpur Assessment year 1985-86 Subject: Assessment of firm M/s. Parasmal Parekh, Jodhpur.
Dear Sir, As entrusted by my client Shri Sanwalram partner of the firm, he has got no objection if an amount of Rs. One lakh is being surrendered by the firm.
Thanking you, Yours faithfully, Sd/-
(S.M. JANGID) A.R. On the basis of the aforesaid two letters on behalf of the assessee conceded that Rs. 1 lakh may be added to the declared income which would raise the net profit rate to about 11.51%. The ITO made an addition of Rs. 1 lakh as the income surrendered by the assessee in addition to the income returned. Assessment was framed accordingly the same day, i.e., on 5-1-1987. The addition was sustained by the learned CIT(A) and also by the Tribunal in ITA No. 226/JP/88 vide its order dated 9-4-1991.
3. Penalty proceedings were initiated in the course of assessment proceedings. In response to the show-cause notice, it was stated by the counsel of the assessee that the assessee agreed to an addition of Rs. 1 lakh subject to the condition that no penalty proceedings will be initiated. The Assessing Officer did not agree with this contention. He concluded that the assessee did furnish inaccurate particulars of income and computed the minimum penalty at Rs. 61,907 and finally levied a penalty of Rs. 70,000.
4. The learned CIT(A) also confirmed the penalty on the ground that the surrender came only when the assessee was cornered from all angles in regard to the alleged fabricated nature of the claim duly supported by an expert opinion.
5. Shri N.M. Ranka, the learned counsel appeared for the assessee. It was submitted by him that in assessment year 1984-85, the assessee had declared a net profit rate of 9.5% and finally a rate of 10% was applied. This year also the net profit was 9.5% but by the addition of Rs. 1 lakh it went up to 11.5%. He drew our attention to page 67 of the paper book wherein a few comparable cases have been given and the rate applied varied from 8% to 10.5%. The declared results were, therefore, just, fair and reasonable according to him. The next contention was that the assessee maintained regular and proper books of account and were subjected to audit under Section 44AB of the Act. The labour payments also, which formed the main basis for the impugned addition, were not more than the standard percentage. The accounts were being looked after by three accountants and that the partners were under a bona fide belief that they have been properly and correctly maintained by its employees. The department had failed to prove positively any inflation of expenses and that the assessee agreed for the addition merely to purchase peace and avoid unending litigation. The letter dated 5-1-1987 from the assessee, he said, bore testimony to this. As regards the report of the finger-print expert, it was submitted that it was quite customary that a person would receive payment on behalf of other workers. Therefore, the similarity did not prove that the labour payments were inflated and fictitious. There was no conscious concealment on the part of the assessee and hence the penalty levied was most unfortunate and unjust. It was emphatically pleaded that the addition was sustained by the Tribunal merely on account of the surrender by the assessee. But there was no evidence of concealment and the situation and the background under which surrender came to be made need to be appreciated. If this is done, he said, the burden under Explanation 1 to Section 271(1)(c) would stand duly discharged and penalty proceedings being quite distinct from the assessment proceedings, the case would no longer remain fit enough to attract penal provisions, despite the surrender of Rs. 1 lakh and its sustenance by the Tribunal. Summing up his arguments, Shri Ranka submitted that, (a) the assessee had duly co-operated with the department, (b) the partners were not a party to the thumb impressions being similar, (c) disbursing authority was one accountant Mr. Nahar who had since expired and hence the benefit of his version was not available, (d) it was customary to obtain payment by one on behalf of the others and (e) that the surrender was essentially to buy peace and to avoid protracted litigation, though it was not the real income of the assessee. Finally, reliance was placed on various judicial pronouncements reported at CIT v. Anwar Ali [1970] 76 ITR 696 (SC), CIT v.Bhauramal Manickchand [1980] 121 ITR 840 (Cal.), CIT v. Goswami Smt. Chandralata Bahuji [1980] 125 ITR 700 (Raj.), CIT v. H. Abdul Bakshi & Bros. [1986] 160 ITR 94 (AP) (FB), CIT v. Smt. Satnam Malik [1987] 167 ITR 764 (Raj.), Sir Shadilal Sugar & General Mills Ltd. v. CIT [1987] 168 ITR 705 (SC) and CIT v. Dharamchand L. Shah [1993] 204 ITR 462 (Bom.).
6. Shri G.C. Bansal represented the department. It is not a simple and usual case of a contractor, he stated, where Section 145 of the Act was applicable on account of the usual defects found in the books. It was a case where the accounts were cooked up with an ulterior motive to evade taxes and that the assessee had such a motive was proved by the report of an expert in the case of labour payments. He recalled the chronology of events commencing from the date of hearing before the Assessing Officer, the production of books, obtaining the report of the finger-print expert, examination of partners and accountants and so on. It was only after this nine-month grilling, he stated, the assessee felt itself cornered and seeing that now there was no escape, ultimately surrendered Rs. 1 lakh. While accepting the surrender, there is no evidence to indicate that the Assessing Officer agreed not to levy any penalty. The Assessing Officer had undertaken quite an exercise to prove that the assessee's claim was fake and hence there was no question of his agreeing not to initiate penalty proceedings. Further, the assessee has not challenged that the muster roll is manipulated and since one of the accountants Shri Nahar has died, the assessee has tried to take advantage of the situation by putting the blame on him and by not producing a diary maintained by him in this respect. When the accounts are audited, they do lend credibility, but that does not mean that they are not open to scrutiny by the Assessing Officer as collusion by the assessee with the auditor cannot be altogether ruled out. The fact that the firm has since been wound up does not exonerate the assessee from penalty proceedings and it reflects on the conduct of the assessee that in spite of surrendering, it went in appeal up to the Tribunal stage to challenge the addition. Finally it was stated that the ratio laid down by the Supreme Court in Anwar Ali's case was no more a good law, particularly after the insertion of the Explanation. Reliance was placed on various authorities reported at CIT v. Dr. R.C. Gupta & Co. [1980] 122 ITR 567 (Raj.), Banaras Chemical Factory v. CIT [1977] 108 ITR 96 (All), Rathnam & Co. v. IAC [1980] 124 ITR 376 (Mad.), H.V. Venugopal Chelliar v. CIT [1985] 153 ITR 376 (Mad.), Pahulal Ved Prakash v. CIT [1990] 186 ITR 589 (All.) Madras Bangalore Transport Co. v. CIT [1991] 190 ITR 679 (Bom.) and CIT v. K.P. Sampalh Reddy [1992] 197 ITR 232 (Kar.) for the various submissions made by him.
7. We have thoughtfully considered the material on record and the rival submissions. In order to appreciate the rival submissions, it would be advantageous, at the outset, to discuss a few legal principles established by authoritative pronouncements and which fit into the facts and circumstances of the case before us.
8. Firstly, it is undisputed that penalty proceedings are separate and distinct from assessment proceedings. Findings in quantum proceedings, though relevant and admissible, they cannot operate as res judicata. Penalty is not a matter of course and is not attracted automatically simply because the additions have been sustained in quantum proceedings. For this principle we have the approval of the jurisdictional High Court in the case of Goswami Smt. Chandralata Bahuji (supra). Hence, in the instant case, the facts and circumstances will have to be seen, for which the order of the Tribunal dated 9-4-1991 in ITA No. 226/JP/88 will certainly be a guide, but will not at once lead us to conclude that penalty is sustainable.
9. Secondly, we are not agreeable with the contention of Shri Ranka that penalty is not leviable as the firm is dissolved long back. This is in view of the very clear provisions in Section 189 of the Act.
10. Thirdly, we also do not agree with his contention that the partners were not aware of the alleged manipulations in the account. For this, we draw support from the decision of the Allahabad High Court in the case of Pahulal Ved Prakash (supra). But this itself will not establish the concealment in the case before us as the other aspects of the case also shall have to be looked into.
11. Next, it is true that since the decision of the Supreme Court in Anwar Ali's case (supra), the law has undergone a sea-change insofar as that the burden of proving concealment has gradually shifted on the assessee of proving non-concealment. However, the basic observation of the Supreme Court, that before penalty can be imposed, the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee consciously concealed the particulars thereof or deliberately furnished inaccurate particulars, still hold good. Thus in the instant case also, by virtue of Explanation 1 to Section 271(1)(c) of the Act, though presumptions are raised against the assessee, those are rebuttable presumptions. And in the process of rebuttal, if the explanation of the assessee is not accepted or is found to be false, that itself will not constitute sufficient material to attract penal provisions. The entirety of circumstances must point to the conclusion of concealment as stated earlier, before a penalty can be imposed. This principle has been enunciated by their Lordships of the Calcutta High Court in the case of Bhaummal Manickchand (supra).
12. That brings us to the question as to how the presumptions raised against the assessee can be rebutted and as to when the initial burden cast on the assessee can be said to have been discharged. The Full Bench of the Andhra Pradesh High Court had the occasion of dealing with this question in the case of H. Abdul Bakshi & Bros, (supra). The Hon'ble High Court held that the initial burden can be discharged by the assessee a preponderance of probabilities and evidence. It can be discharged either by the material already on record or by adducing fresh evidence during penalty proceedings^ The jurisdictional High Court, in the case of Smt. Satnam Malik (supra), went a little further and held that, at times, even the explanation of the assessee, its nature and probabilities arising therefrom may be sufficient to discharge the burden, provided the explanation is not unfounded. The quantum of proof necessary, the Hon'ble High Court stated, would be that required in a civil case, having preponderance of probabilities.
13. It is stated in the earlier part of this order that the finding of the Tribunal in the quantum appeal can be a good guide in penalty proceedings. Hence it would be advantageous to turn to that order in order to ascertain as to under what circumstances the Tribunal sustained the addition of Rs. 1 lakh.
14. Firstly, the Tribunal rejected the contention of the assessee that the surrender was effected under undue influence, pressure or coercion. By referring to the order sheet entries it also rejected the contention that the surrender was made on the understanding that the penal provisions would not be invoked. Then the Tribunal went on to narrate the background in which the assessment was completed and it would be worth reproducing the same here in extenso in order to enable us to decide the issue before us. Starting on page 11 of the order, it reads as follows :
However, it may be stated, for the sake of completing the narration, that the ITO had found that the profit rate declared by the assessee was 9.5% and that the net profit rate applied in comparable cases was around 10% and the counsel conceded that "Rs. 1 lakh may be added to the declared income which would raise the net profit rate to about 11.51% which is the maximum that the appellate authorities are likely to uphold in the case of contractors where total receipts exceeded Rs. 51 lacs. The approach of the ITO as is clear from the assessment order was, therefore, that the profit rate declared only 9.5% as against 10% applied in the preceding assessment year 1984-85. He had entertained a doubt regarding the genuineness of the assessee's account books consisting of Cash Book, Ledger, vouchers which were suspected to be faked and cooked up. The ITO was also doubting the following expenses which had been claimed by the assessee :-
Rs.
Diesel 1,03,037 Transportation 1,26,000 Soil carrying expenses 2,50,006 Donation 19,265 Wages 10,27,621
So far as the wages are concerned, doubts had arisen in the mind of the ITO on account of thumb impressions of same person repeated at a number of places on the muster rolls for the period from 14-5-1983 to 28-2-1984. In this background the ITO issued notices under Section 143(2)/143(1) requiring the assessee to produce evidence in support of the return and to produce the books of account on 16-4-1986. On the said date when books of account were produced, they were impounded by taking the view that they were faked. Thereafter the report dated 23-7-1986 of the Director, Finger Print Bureau, Calcutta showed that 32 finger prints were of one person, 17 of another person and that 9 finger prints were not clear enough for comparison. On 30-9-1986 when the assessee's partner Shri Parasmal Parekh was examined, he stated that he was entitled to represent the firm in all the matters. On the same day the other partner Shri Kewalchand Jain was also examined but he was also not asked as to what was the case of the assessee in regard to muster rolls. Another person examined on the same date was the Munim Nemichand Sharma who stated that nearly all the muster rolls were prepared by the Munim Shri Satyanarain Sharma and that he and Rekhab Mai Nahar, Munims used to prepare the vouchers. It is on 17-11-1986 when Shri Parasmal Parekh the assessee's partner was again examined that he was asked more specific questions. He stated that generally Sh. Sanwalram was recruiting the labourers and that the Munim Shri Rekhab Mal Nahar was exercising control over the actual expenditure on labourers. When he was shown the muster rolls in which thumb impressions were put against names of different persons and he was asked to say what he had to about it, he stated that the actual state of affairs was known only to the Munim Shri Rekhab Mal Nahar and that sometimes it happened that one of the labourers/wage earners was being authorised by others to receive payment on behalf of them and that it was likely that such persons may have out their thumb impressions against others for which they had been authorised. When he was asked whether he was directly recruiting labourers or through some agents, Shri Parasmal Parekh replied that at 12th Road Crossing labourers collected in the morning and anybody who wanted them could pick them up from there. He also stated that he was unable to produce those labourers who were not in his employment then and even they were not known to him directly. He also denied that any payments were made to the labourers in his own presence as had been the statement of the Munim Sh. Nemichand Sharma on 30-9-1986. he stated that the payments were made only through Shri Rekhab Mai Nahar. Thus, the assessee had put forward what its case was in regard to the mode of recruiting labourers and the mode of payment to them as recorded in the muster rolls. Sh. Satyanarain Sharma, Munim had stated in his statement dated 9-10-1986 that the muster roll from April 1983 to February 1984 was in his writing aad that the thumb impressions of the labourers in the muster roll were obtained by Shri Rekhab Mal Nahar who was the main Munim and that the thumb impressions were not affixed in his own presence. The partner Shri Kewalchand Jain was again examined on 3-12-1986 and he confirmed the fact that it did happen that at the time of payment one labourer received payment for other labourers also. He also stated that there was never any complaint from any one labourer that he did not get the wages and that thumb impressions were affixed by the labourers who received the payments actually. On 4-12-1986 the assessee's other partner Shri Sanwalram was examined and he was asked since he was familiar with the contract work, whether it was customary in this type of work that only one man received payment for other labourers also and he replied in the affirmative. As mentioned earlier, the ITO had required the assessee vide notice dated 9-10-1986 to produce some of the labourers (whose names we have mentioned in para 2 of this order) and the reply dated 15-10-1986 of the assessee was that it was unable to produce those labourers since the execution of the work had been suspended and the labourers had migrated to other sites of work, they being casual and migratory. It is from the non-production of the labourers that the ITO took the view that the expenses under the head 'Wages' were bogus and inflated. In regard to the diesel expenditure also he entertained doubt since the assessee-firm did not own any vehicle. However, the statements of the Munims were that the muster roll was prepared on the basis of site diary which used to remain with the deceased Munim Sh. Rekhab Mai Nahar and, therefore, the ITO could not have drawn an adverse inference from its non-production by the assessee. The ITO had taken the view that the wage bills, had been considerably inflated and that fictitious names of wage earners had been added and false disbursement shown and claimed. He had also held that the account books did not reflect the correct state of affairs and that muster rolls and vouchers and payments included forged entries and that the expenditures had been inflated. As noticed above, the ITO had also observed that the expenses under the head Advertisement, Travelling, Transportation and Donation had either been inflated or no vouchers were available at all. This was thus the background in which on 5-1-1987 the ITO wanted to complete the assessment. Letters were given on behalf of the assessee as have been referred to above agreeing to the addition of Rs. 1 lakh. The amount of Rs. 1 lakh may have been estimated or arrived at in any way but it is clear that the surrender of this amount was accepted by the ITO since thereby the profit rate got raised to 11.51%. We have referred to the foregoing material only to appreciate the background in which the surrender was made because the assessee was not able to produce the labourers and the other expenses were being doubted by the ITO. As already observed by us above, the decision to agree to the addition of Rs. 1 lakh on the part of the assessee was consciously, voluntarily and willingly arrived at by the assessee and, therefore, it is not possible to enquire into the reasonableness of the same on the basis of audit, past history or comparable cases. The result is that the addition of Rs. 1 lakh cannot be interfered with on the above facts and in the foregoing background. We hold accordingly.
From the above, it is observed that mainly there were three factors which weighed with the Assessing Officer and the assessee to agree on an addition of 1 lakh. The first was the n.p. rate of 9.5% declared by the assessee as against the normal rate of 10% in comparable cases. The second was that certain expenses, in the opinion of the Assessing Officer, were inflated and the third was the allegation of the wages bill being fake insofar as that only three persons received the payment as against 58 names shown in the muster roll.
As regards the net profit rate and the expenses on travelling, transportation, advertisement, donation, etc., while agreeing with the concession of Rs. 1 lakh made by the assessee, the Assessing Officer expressed his satisfaction that this addition would raise the net profit rate to 11.51 % and he accordingly framed the assessment order. Thus so far as these two factors are concerned, which form part of the impugned addition, nowhere concealment is established. The addition, whatever part may be attributed to these factors, is mainly to take care of the possible leakages. But the Assessing Officer has not been able to establish any conscious concealment by the assessee on account of these two factors. Thus, addition may be sustained as it was agreed to by the assessee but there is nothing on record to suggest concealment or an attempt to evade tax by furnishing inaccurate particulars. The Assessing Officer's satisfaction that the addition would raise the net profit to 11.51 % does not tantamount to saying that the assessee had undisclosed income which was not recorded in the books. The addition on account of these reasons, therefore, does not, under any circumstances, attract penalty keeping in view the various principles laid down by the Courts.
Taking up the matter of wages paid to alleged fictitious persons, first of all, the computation of penalty, if at all leviable, itself fails after having held that the entire addition is not on account of alleged bogus wages alone. For the sake of argument, if it is accepted that the wages paid are bogus, it is neither ascertained nor ascertainable, as to how much addition is attributable to it.
15. On merits also, the explanation of the assessee that it is customary to receive payment on behalf of others, cannot be brushed aside. Though there is no direct evidence for the same, yet it is not an impossibility and there is no improbability in it. It is particularly so when the Assessing Officer has not disputed about the work having been carried out. If we solely go by the forensic report, then it would lead to an absurd conclusion that only those labourers carried out contract work worth Rs. 51,56,471 which figure is not disputed. The preponderance is further strengthened by the fact that in the year under appeal total wages amounted to 20% of total contract receipts as against 54% in the preceding assessment year. Thus nowhere conscious concealment or furnishing of inaccurate particulars, with a view to defraud the revenue, get established. In all the authorities relied upon by the revenue, the glaring distinguishing feature was that the assessees admitted unequivocally of having earned income which was not disclosed and in most of the cases there was direct nexus of concealment with the material on record. Here, no such nexus has been established. It is evident from the background reproduced earlier that the surrender came in the wake of various factors which ultimately guided the assessee that it would be more at peace by paying some more tax rather than undergoing the exercise of establishing each payment. The Tribunal has given a clear finding to this effect in the quantum appeal and said that the surrender was made because the assessee was not able to produce the labourers and the other expenses were being doubted by the Assessing Officer. The assessee was naturally inclined to think that since it was not able to produce the labourers, it would be difficult to convince the Assessing Officer about the genuineness of the payments and hence thought it wise to agree to an addition of Rs. 1 lakh without conceding it to be its undisclosed income. The Assessing Officer, on his part, being satisfied with this concession, did not go further to establish any concealment and framed the assessment order on the very same day. Thus, in our opinion, the assessee duly discharged its burden of rebutting the presumption raised against it, but the Assessing Officer failed to do so when the burden shifted on him. Under the totality of the circumstances, therefore, we do not consider this to be a good case to attract penalty provisions.
16. Keeping in view the principles as discussed earlier and the facts and circumstances of the case, we cancel the penalty of Rs. 70,000 levied under Section 271(1)(c) of the Act.
17. In the result, the appeal is allowed.