Gujarat High Court
Commissioner Of Income-Tax vs Vilasben Hasmukhlal Shah on 12 June, 1991
Equivalent citations: [1991]192ITR214(GUJ)
JUDGMENT R.K. Abichandani, J.
1. At the outset, it may be stated that this reference arises from a decision of the Tribunal which included one of us, and when this matter was called out, this fact was pointed out by us to learned counsel appearing for both the parties showing our disinclination to hear the matter on that ground. Both learned counsel submitted that the Tribunal had only followed an earlier decision rendered in Jogibhai Mangalbhai v. ITO, decided on October 18, 1975, and further that the substantive points involved in this reference are already covered by the decision of this court in CIT v. Suleman Abdul Sattar [1983] 139 ITR 8, and insisted that the matter should be heard and disposed of by this Bench. Since both counsel wanted this Bench to take up the matter for hearing as the matter was covered by an earlier decision of this court, it has been taken up for hearing.
2. The assessee had filed a return for the assessment year 1970-71 declaring the total income as Rs. 4,577. In Part IV of the said return, the assessee had claimed a total amount of Rs. 1,03,966 as cross-word puzzle prize of a casual nature. By order dated March 27, 1973, the Income-tax Officer framed the assessment on a total income of Rs. 1,18,940 as against the income of Rs. 4,577 declared in the return as taxable. The Income-tax Officer held that the amount of Rs. 1,03,966 for which exemption was claimed was income from undisclosed sources. Similarly, the amounts of Rs. 10,397 being the commission paid in connection with the said prize and Rs. 1,532 being the amount allegedly earned on the investment of the said prize were also included in the assessee's total income. The Income-tax Officer initiated penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), in respect of these three items and referred the matter to the Inspecting Assistant Commissioner for penalty proceedings. By his order dated March 26, 1975, the Inspecting Assistant Commissioner held that the case attracted the provisions of section 271(1)(c) of the said Act and levied a penalty of Rs. 1,15,000 on the asessee. From the evidence on record, he held that the assessee had not received any genuine prize and the receipt was in the nature of concealed income not accounted for and that, by claiming it to be a genuine prize, there was an attempt to furnish inaccurate particulars of income as well. He found that there was collusion between the assessee and the organisers of the crossword puzzle competition, Kum Kum Sahitya Harifai, Indore, who organised the fraud and they had colluded in a fraudulent manner with the assessee who, by camouflage, concealed the income as a prize. He held that this was a case covered by the Explanation to section 271(1)(c) of the Act. The matter was carried to the Income-tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad, against the order of the Inspecting Assistant Commissioner.
3. The Tribunal found that the contentions raised by the parties were identical with those raised in Jogibhai Mangalbhai v. ITO decided by the Tribunal on October 18, 1975. It was agreed by the parties before the Tribunal that since the matter was covered by Jogibhai's case rendered by the Tribunal earlier, the penalty levied by the Inspecting Assistant Commissioner shall have to be cancelled and, accordingly, the Tribunal not finding it necessary to set out the contentions raised in this case saw no reason to make a departure from the view already taken by it in the said case and cancelled the penalty imposed on the asseseee. The Tribunal referred the following three questions under section 256(1) of the Act for the opinion of this court :
"(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 a 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 under appeal and, therefore, the penalty under section 271(1)(c) of the Act cannot be sustained ?"
4. The question whether the disclosure made by the assessee in Part IV of the return was good enough to throw a protective armour against the assessee insulating him against any action under section 271(1)(c) came up for consideration before a Division Bench of this court in CIT v. Suleman Abdul Sattar [1983] 139 ITR 8 (to which my esteemed brother was a party) and the facts on which that reference arose were more or less identical with the facts of the present case. In that case also from the documents and materials seized during the search and the statements recorded in connnection with the crossword competition during the course of investigation, it was discovered that the crossword puzzle was conducted only with a view to lend colour of legitimate source to unaccounted money and convert it into white money. The assessee in that case had disclosed a sum of money in Part IV of the return as prize money won in a crossword competition which disclosure was factually false since the amount was in fact not won in any crossword competition whatsoever. The Tribunal, in that case, has also followed its earlier decision in Jogibhai's case and set aside the penalty imposed on the assessee and held that the assessee was not guilty of concealment of income or of furnishing inaccurate and false particulars. The Division Bench of this High Court, on a reference, held that the assessee could not claim immunity from penalty by falsely indicating in Part IV of the return that he had earned income of a casual nature. It was found that the disclosure in Part IV was not an honest and bona fide disclosure. It was made only with a view to conceal the real source of the unaccounted income. This court held that, besides making a statement in Part IV of the return which was proved to be false, the assessee had not led any evidence nor was there any material on record to rebut the presumption which arose under the Explanation to section 271(1)(c) of the Act. The Division Bench, therefore, answered the questions referred to it in the negative and against the assessee. This decision of the High Court was followed in the subsequent Division Bench judgment in CIT v. Namlabhai Bhanabhai [1987] 163 ITR 189, wherein also questions similar to those at Nos. (1) and (2) were referred to the High Court for opinion. In that case also, in part IV of the return, the assessee had declared that he had received a certain sum as prize money from Sahitya Harifai, a cross-word competition which declarations was found to be false. The proceedings initiated under section 271(1)(c) of the Act resulted in a penalty, but the Appellate Tribunal, following its decision in the case of Jogibhai Mangalbhai, cancelled the penalty on the assessee. Answering the questions referred for opinion in the negative, it was held that the Tribunal was not right in holding that, on account of the disclosure made by the assessee in Part IV of the return, he could not be said to have concealed his income or furnished inaccurate particulars thereon and that, consequently, levy of penalty under section 271(1)(c) was not justified. In CIT v. Shri Imtiaz U. Digmar [1987] 163 ITR 229 again the said question had arisen before this High Court and was answered following Suleman Abdul Sattar's case [1983] 139 ITR 8. Both learned counsel argued that questions Nos. (1) and (2) which are referred to us are squarely covered by the above decisions of this court and will have to be answered in the negative and against the assessee, following them. It is evident that questions Nos. (1) and (2) referred to us are squarely covered by the decisions of this court referred to above, with which we respectfully agree. From the facts and circumstances of the casem it is clear that the Tribunal was not right in law in holding that due to disclosure made by the assessee in Part IV of the return, she could not be said to have furnished inaccurate particulars of income within the meaning of section 271(1)(c) of the Act and that, consequently, levy of penalty under the said provisions was not justified. It is clear that the disclosure of prize money received in Part IV of the return of income could not be considered as a true and full disclosure within the meaning of section 271(1)(c) of the Act. Questions Nos. (1) and (2) are, therefore, answered in the negative and against the assessee.
5. As regards question No. (3), we feel that the Tribunal has not dealt with the aspects having a bearing on the question whether the amount was really income earned by the assessee during the year under appeal and the connected question as to whether the latter part of the Explanation to section 271(1)(c) was attracted or not and, therefore, we feel that this question does not arise from the decision of the Tribunal for our consideration. It was not disputed by both learned counsel that the question did not in fact arise from the decision of the Tribunal for our consideration. We, therefore, hold that, since question No. (3) does not arise for our consideration, it is not necessary to answer the same. Mr. J. P. Shah, learned counsel, submitted that the other contentions which were required to be raised before the Tribunal were not raised and considered since it disposed of the matter following its earlier decision in Jogibhai's case. We make it clear that, if it is open to the assessee to raise any other contentions before the Tribunal, they can be so raised and suitably dealt with by the Tribunal in accordance with law.
6. The reference stands disposed of accordingly with no order as to costs.