1. This appeal by the Revenue is directed against the deletion of penalty" amounting to Rs. 52,589 imposed under Section 271(1)(c) of the IT Act, 1961, and relates to the asst. yr. 1988-89.
2. I have heard the rival submissions in the light of material placed before me and precedents relied upon. The assessee is a widow. She was aged around 70 years at the relevant point of time. She is heart patient. During the relevant assessment year, assessee received gifts of Rs. 1,20,000 as under : 3. In order to examine the veracity of the aforesaid gifts, AO issued summons to the donors. AO stated in the order that only Shri Tejumal H.Malani did appear. CIT(A) stated in the order that all the donors did appear but examination could be conducted only in respect of Shri Tejumal H. Malani. Shri Tejumal H. Malani was examined because he made the gift by cash. All other donors made the gift by cheque. All the donors did accept on affidavit the factum of gift. Shri Tejumal H.Malani did accept while examining that he gifted cash of Rs. 20,000 to the assessee. It was submitted by the learned counsel that the examination of Shri Tejumal H. Malani continued till evening, as such other donors were not examined. AO did verbally suggested to bring the other donors on the next day. Thereafter, donors did not come. Assessee did not have any control over them.
4. Apprehending that the donors will be harassed, the assessee, to buy peace, to avoid litigation and to avoid any other inconvenience to the donors, voluntarily offered the gifts for taxation. She made an application under Section 273A to the CIT, for the waiver of penalty and interest.
5. The question posed before the CIT(A) was that whether penalty could be levied on the panoply of Expln. 1 to Section 271(1)(c) of the IT Act, 1961. Expln. 1 to Section 271(1)(c) reads as under: "Expln. I--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 AO or the CIT(A) to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, 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." 6. According to Black's Law Dictionary, "false" means not true, The word "false" has two distinct and well-recognized meanings: fi) intentionally or knowingly or negligently untrue; (ii) untrue by mistake or accident. A thing is called "false" when it is done, or made, with knowledge, actual or constructive, that it is untrue or illegal, or is said to be done falsely when the meaning is that the party is in fault for its error. A statement is "false" if it was untrue by the person making it, or causing it to be made.
7. In wider sense, the word "false" will embrace all types of falsehoods intentional or unintentional but in narrower sense it covers only intentional falsehood. In Expln. 1 to Section 271(1)(c), the word is used as an ingredient of penal offence and, therefore, a guilty element, is sine qua non, to constitute the falsehood. A person is said to give false evidence, if he, (i) legally bound by an oath or by an express provision of law to state the truth, or (ii) being bound by law to make a declaration upon any subject, (iii) makes any statement, which is false, and (iv) which he either knows or believes to be false, or does not believe to be true.
8. Apropos the shifting and weighing of evidence, the law in this regard is canonized in the dictum:--"Falsus in Uno, Falsus in Omnibus".
False in one thing, false in everything. This maxim relates to credibility of witnesses, for a witness caught telling a lie in one thing discredits himself in regard to the rest of his testimony.
Although the doctrine of Falsus in Uno, Falsus in Omnibus is applicable in criminal law, in the case of Amal Kumar Chakraborty v. CIT (1994) 207 ITR 376 (Cal) it was held that this doctrine is a sound principle to apply in taxation when the matter is one of finding of fact on the basis of statements of a witness and their judicial evaluation. In this case, in 1975, the assessee gave a false statement by stating that he had no connection with the bank deposits. Later he made a volte face and said that the deposits were from the money supposedly declared in 1971. Therefore, the later statement of the assessee could not be held to be credited as the source of the deposit. The apex Court in the case of Rajinder v. State of Haryana JT 1995 (6) SC 272 has held that Court has to endeavour to separate the grain from the chaff and accept that part of the evidence which is found to be truthful and consistent.
9. As per Expln. 1, if the AO finds that the explanation offered by the assessee is false, then penalty can be levied on the amount which is found to be concealed. Therefore, the whole idea behind Expln. 1 is that the AO has to first record reasons for arriving at a conclusion that there is a failure on the part of the assessee. Hence, after seeking an explanation if the authority comes to a. conclusion that it is false, then the AO can proceed to levy the penalty. Therefore, this Explanation casts a duty on the AO that he should first record reasons that there has been concealment of income and then the explanation is sought. These are the basic requirements of natural justice desired by the legislature for providing this Explanation. Therefore, the initial burden is on the Department to prima facie record that there was concealment and thereafter the Explanation is to be sought and in case the explanation is found to be false, then to the extent the income is found to have been concealed and the Explanation is found to be false, then the authority can proceed against the assessee.
10. In the case of CIT v. Suresh Chandra Mittal (2000) 241 ITR 124 (MP) action under Section 132 was taken against the assessee. This led to reopening of the assessment. Assessee revised the returns. AO levied the penalty rejecting the contention of the assessee that revision was made suo motu and additional income was offered to buy peace and to avoid litigation. When the matter was carried to the Tribunal, the following view was taken: "The assessee had no chance of carrying through his explanation and the AO too did not record any finding as to the acceptability or otherwise of the Explanation of the assessee. Under these circumstances the proviso to Expln. 1 to Section 271 is not attracted. The Revenue did not at all discharge the burden to prove that there was concealment of income by the assessee. It simply rested its conclusion on the Act of voluntary surrender by the assessee, which obviously was done in good faith and to buy peace." The Tribunal placed reliance on the decision of the apex Court rendered in the case of Sir Shadilal Sugar & General Mills Ltd. v. CIT (1987) 168 ITR 705 (SC), in support holding as under : "We find that the assessee admitted that these were the incomes of the assessee but that was not an admission that there was deliberate concealment. From agreeing to additions, it does not follow that the amount agreed to be added was concealed income. There may be a hundred and one reasons for such admission, i.e., when the assessee realises the true position, it does not dispute certain disallowances but that does not absolve the Revenue from proving the mens rea of a quasi-criminal offence." Hon'ble High Court agreed with the view taken by the Tribunal. It was held that the initial burden lies on the Revenue to establish that the assessee had concealed the income or had furnished inaccurate particulars of such income. The burden shifts to the assessee only if he fails to offer any explanation for the undisclosed income or offers an explanation, which is found to be false by the AO. However, the proviso to Expln. 1 provides for shifting of this burden again where the explanation offered by the assessee is found to be bona fide.
Hon'ble Supreme Court vide its judgment dt. 26th July, 2001, affirmed the view taken by the Hon'ble Madhya Pradesh High Court in the case of Suresh Chandra Mittal (supra). The following order is passed: "We have read the order of the High Court and the statement of case.
Given the facts and circumstances, we do not think that any interference with the order of the High Court is called for." 11. Adverting to the decision of the apex Court rendered in the case of K.P. Madhusudhanan v. CIT (2001) 251 ITR 99 (SC), learned Departmental Representative submitted that this decision was rendered on 21st Aug., 2001. Hence, the ratio of this decision is to be followed. In this case, assessee took certain Bank drafts for payments to suppliers of rice in Andhra Pradesh. Entries were made in the accounts not on the dates on which the drafts were obtained but a few days later. It was explained that sufficient cash balance was not available on those dates. Loans were obtained from friends. These loans were payable within a short time, as such no entries were made in the books. Since the assessee was unable to furnish evidence of such loans, it offered the amount for addition. Penalty proceedings were initiated. AO did not accept the explanation of the assessee. Penalty was imposed. The Tribunal cancelled the penalty on the ground that in the notice initiating penalty proceedings assessee was not intimated about the proposed action under Expln. 1(B) to Section 271{l)(c). High Court held the imposition of penalty valid, apex Court affirmed the decision of the High Court, apex Court has held that by reason of the addition of Explanation to Section 271{l)(c), the view taken in the case of Sir Shadilal Sugar & General Mills Ltd. (supra) can no longer be said to be applicable. The implication of this decision is that if the case of the assessee comes within the ken of Explanation, then shelter of Sir Shadilal Sugar and General Mills Ltd.'s decision cannot be taken.
However, if assessee's explanation is found not to be false and bona fide is proved, then there can be no penalty for concealment.Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai AIR 1976 SC 1455 (at pp. 1467-68) has held that the ruling of a superior Court is not of scriptural sanctity but it is of ratio-wise luminosity within the edifice of facts where the judicial lamp plays the legal flame. Each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid temptation as said by Cardozo, by matching the colour of one case against the colour of another.
13. I find that there is absolutely no conflict between the decisions of the apex Court rendered in the case of CIT v. Suresh Chandm Mittal (2001) 251 ITR 9 (SC) and K.P. Madhusudhanan's case (supra). These two decisions were rendered in the context of two different situations.
Therefore, it is necessary to see the text and context of the decisions before applying the ratio decidendi.
14. In the present case I find that the assessee is an old lady. Her relatives made gifts for her support. All of them were assessed to tax.
Out of the six gifts, five gifts were made by cheque. The donor who made the cash gift was examined by the AO. He did accept the factum of gift. With an intent to avoid any harassment to the donors, assessee agreed to pay the tax on the gifted amount. AO did not record any finding that the explanation offered by the assessee was false and the bona fide was not proved. As such, the conditions precedent for invoking Expln. 1 to Section 271(1)(c) did not exist in the facts and circumstances of the present case. Once it is held that the case of the assessee falls beyond the ken of Expln. 1 to Section 271(1)(c), the conclusion is irresistible that case does not come within the sweep of the ratio laid down by the apex Court in the case of K.P. Madhusudhanan (supra). It comes within the ambit of the decision laid down in the case of Suresh Chandra Mittal (supra). On this factual backdrop I decide the issue in favour of the assessee and against the Revenue.