Gujarat High Court
Commissioner Of Income-Tax vs Abdulgafur Ahmed Wagmar on 11 August, 1992
Equivalent citations: [1993]199ITR827(GUJ)
Author: S.B. Majmudar
Bench: S.B. Majmudar
JUDGMENT S.B. Majmudar, J.
1. In this reference at the instance of the Revenue, the following questions have been referred for our opinion under section 256(1) of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that due to disclosure made by the assessee in Part IV of the return, the assessee could not be said to have furnished inaccurate particulars of income within the meaning of section 271(1)(c) of the Act and consequently the levy of penalty under the said section was not justified ?
(2) Whether the disclosure of the prize money receipts in Part IV of the return of income could be considered as true and full disclosure within the meaning of section 271(1)(c) of the Act ?
(3) Whether the Tribunal was right in law in holding that, except for the falsity of the explanation of the assessee, it was not established by positive evidence by the Revenue that the impugned amount was income earned by the assessee during the year in appeal and, therefore, the penalty under section 271(1)(c) of the Act cannot be sustained ?
(4) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in deleting the penalty imposed under section 271(1)(c) read with the Explanation thereto ?"
2. A few background facts leading to these proceedings may be noticed at the outset. The respondent-assessee is an individual. The relevant assessment year is 1969-70. The respondent filed a return of income relevant to the assessment year disclosing a total income of Rs. 2,400. In Part IV of the return, an amount of Rs. 1,65,149 was shown to have been received from Kasti Harifai. The Income-tax Officer, however, did not accept the genuineness of the prize money received and added the same in the income of the assessee. The Income-tax Officer also added an amount of Rs. 16,515 being ten per cent. commission claimed to have been paid for conversion. This assessment was made under section 144 of the Act. The Income-tax Officer initiated penalty proceedings under section 271(1)(c) of the Act and referred the matter to the Inspecting Assistant Commissioner under section 274(2) of the Act.
3. The Inspecting Assistant Commissioner considered the submissions made by the assessee. He held that the assessee had not genuinely participated in the crossword puzzle competition known as Kosoti Sahitya Harifai and that the total prize of Rs. 1,65,149 claimed to have been received was a device to convert unaccounted money into ostensible price money and claim the exemption under the Act. The Inspecting Assistant Commissioner, on evidence, came to the conclusion that the assessee was guilty of concealment of income or filing inaccurate particulars of income. He imposed a penalty of Rs. 2 lakhs under section 271(1)(c) read with the Explanation thereto.
4. The respondent-assessee challenged the order of penalty in appeal before the Tribunal. The Tribunal, having considered the rival submissions, found that the question regarding penalty was considered the rival submissions, found that the question regarding penalty was considered in I. T. A. No. 373/(Ahd.) of 1974-75, decided on October 18, 1975. The Tribunal found that the levy of penalty for concealment of income or furnishing inaccurate particulars of income was not justified as disclosure in Part IV of the return was sufficient disclosure. The Tribunal, therefore, deleted the penalty imposed under section 271(1)(c) read with the Explanation thereto both in respect of the addition of prize money as also the addition of commission payment. From the aforesaid order of the Tribunal, the aforesaid four questions have been referred for our opinion as noted earlier.
5. We have heard the learned advocate for the Revenue in support of this reverence. We find that all these questions are squarely covered by a decision of this court in CIT v. Suleman Abdul Sattar [1983] 139 ITR 8. On almost identical facts, this court has come to the conclusion that, as the total income returned was less than 80 percent. of the total income as assessed, a rebuttable presumption that the assessee had concealed particulars of income or furnished inaccurate particulars thereof arose and the assessee cannot be said to have discharged the burden which lay upon him to prove that the failure to return the correct income did not arise on account of any fraud or willful neglect on his part. In view of the fact that the assessee had shown the amount in Part IV of his return, there was a clear admission that he had earned the income shown therein in the year under consideration. The assessee could not claim immunity from penalty by falsely indicating in Part IV of the return that the had earned income of a casual nature. Under these circumstances, deletion of penalty by the Tribunal will not be justified and the levy of penalty will remain justified. In the aforesaid decision of this court, the assessee had also put forward a similar contention to that put forward in the present proceedings, viz., that he had earned prize money which was shown as casual income in Part IV of his return. This court observed on such identical facts that such participation and winning of prize money in such participation was not a genuine competition. It may be noted that the facts in Suleman's case [1983] 139 ITR 8 (Guj) and the facts in the present case are by and large identical. In the present case also, the authorities have come to the conclusion that the assessee's version that he secured a prize in crossword competition was palpably false. Since the assessee admitted the fact that he had earned income during the said assessment year by showing the same in Part IV of the return, the authorities below were justified in bringing the same to tax as income derived from an undisclosed source. Under the Explanation to section 271(1)(c) of the Act (as it then stood) where the total income assessed, such person was deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of the said clause, unless he was able to show that the failure to return the correct income was not on account of any fraud or gross or willful neglect on his part. Once it is established that the difference between the returned income and the assessed income is more than 20 per cent., a presumption of concealment or willful furnishing of inaccurate particulars arises against the assessee and, unless that presumption is rebutted, the Revenue would be entitled to levy penalty in accordance with the said provision. In our view, the aforesaid decision of this court squarely applies to the facts of the present case as the facts of both these cases are by and large identical.
6. In the result, the questions referred for our opinion are answered in the negative, in favour of the Revenue and against the assessee. There will be no order as to costs.