These are appeals by the assessee and are directed against consolidated order of the Commissioner (Appeals) dated 11-3-1998 for assessment years 1990-91 to 1995-96. The assessee in these appeals is aggrieved with the levy of penalty under the provisions of section 271D of the Income Tax Act, 1961. The penalty levied for different assessment years is as follows: The assessee in the present case is an Advocate carrying on legal profession for last so many years. During the years under consideration, he was mainly dealing with the cases of farmers pertaining to compensation on compulsory acquisition of their land by the government. A search proceeding was carried out at the assessee from 21-8-1995 to 22-8-1995. As a result of search various incriminating documents and records were seized by the department and block assessment order under section 158BC read with section 143(3) was passed on 24-8-1996 for the block period from 1-4-1985 to 21-8-1995.
While scrutinizing the seized documents in the course of assessment for block period, the assessing officer observed that assessee had accepted and repaid loans/deposits in excess of Rs. 20,000 by mode other than account payee cheques/drafts and thus has contravened the provisions of sections 269SS and 271D. The assessing officer thereafter had initiated penalty proceedings under sections 269SS and 269T. We are concerned with the contravention made under the provisions of section 269SS in the present appeals. The year-wise contravention as found by the assessing officer is as follows: It has clearly been recorded in all the penalty orders that the seized material upon which it has been found that the assessee had accepted these loans/deposits contains the signature of both the parties ie.
loaner and loanee, as it is clear from the following observations of the assessing officer in the penalty order appearing at page 3 for assessment year 1990-91 : As regards the assessee's plea that no loaner has accepted to have given loan is not acceptable as Assistant Commissioner while scrutinizing the seized material noticed that the assessee has accepted loans from various persons which is available in the seized material at Serial Nos. 10, 14, 15, 21, 22, 42, 44 and 45, 46, and 27 of the inventory attached to the Panchnama drawn at the time of search and seizure operation. The said material also contains the signature of both the parties ie. loaner and loanee. "(Emphasis here italicised in print supplied) The above observation of the assessing officer has not been disputed by the assessee.
It is also manifest to point out here that penalty proceedings in respect of contravention of section 269T under the provisions of section 271E were also initiated in respect of repayment of these loans and the issue regarding levy of penalty under section 271E had travelled upto the Tribunal and the Tribunal has decided the said issue vide its order dated 9-6-2000 in ITA Nos. 956 to 961 /PN/98 vide these appeals the order of the Commissioner (Appeals) in which these penalties were deleted, was upheld by the Tribunal. Thus, penalty under section 271E was found not leviable on the ground that the repayment of the loan was in respect of 'loans and not in respect of 'deposits'. The provisions of section 269T being applicable only to deposits, so no penalty could have been levied under section 271E. It is necessary to reproduce some of the observations of the Tribunal in the said order which will be relevant for the purposes of deciding the present appeals also.
"... We have perused the statement of the assessee recorded under section 132(4) placed in the compilation at pages 42 to 45. In question No. 3 on page 42, a question was asked to the assessee to give details regarding loans taken by him from various parties. The question No. 4 is also in regard to the records maintained by the assessee in regard to these loans. Subsequent questions also are in regard to the advances received and interest paid by the assessee on the same. The statement of one of the creditors, Shri Vishnu L. Patil (page 23 of the paper book) was also perused by us. He was also asked regarding the loans obtained by the assessee from him. In short, the department's case has always been that the assessee has borrowed different sums of money by way of loans in different years from 1990-91 to 1996-97 in contravention of section 269SS. Accordingly, what the assessee repaid were loans and not deposits and therefore, provisions of section 271 E are not applicable." "... Thus, the initiative in depositing money comes usually from the depositor. This is not the case with the assessee, because he has made specific borrowings from different persons and these constitute loans in his hands .... " ".. . The assessee's case is that he has repaid the loans and not deposits and, therefore, question of invoking provisions of section 271E for contravention of section 269T could not have arisen." "To conclude, there is a marked distinction between 'loan' and 'deposit' as brought out supra; the assessee repaid loans and not deposits; and therefore, question of invoking provisions of section 271E for contravention of section 269T does not arise. Accordingly, we uphold the orders of the Commissioner (Appeals) and decline to interfere." The learned counsel of the assessee narrated the abovementioned facts.
He further contended that the penalty has been levied and upheld only on the basis that there was admission in the form of statement given by the assessee during the course of search proceedings. He further contended that for levy of penalty, it is not sufficient to base the penalty only on the statement recorded. It was for the revenue to prove that the assessee had contravened the provisions of section 269SS.Unless the assessing officer proves that assessee had obtained or received loans/ deposits in excess of Rs. 20,000 in contravention of provisions of section 269SS, the levy of penalty is bad in law. For raising this contention he referred to the following definition given in Oxford English Dictionary on Historical Principles, 3rd Edition, Vol. I - A-11.
1. To take or receive with consenting mind; to receive with favour 1380.
: Something laid up in a place, or committed to the charge of a person, for safe keeping. A sum of money deposited in a bank. Something committed to another person's charge as a pledge.
A thing lent; esp. a sum of money lent for a time, to be returned in money or money's worth, and usually at interest ME. Said, in recent use, of a word, a custom etc. borrowed or adopted by one people's from another, The action, or an act, of lending.
: To seize, grip, catch etc. To lay hold upon, get into one's hands by force or artifice, to seize capture, esp. in war; to make prisoner; hence To catch, capture.
He also referred to the observations given in respect of deposits and loans in Law Lexicon, which are as follows: : Money paid to a person as an earnest or security for the performance of some contract especially a contract for the sale of immovable property- : The terms 'loans' and 'deposits' are not mutually exclusive terms.
There are a number of common features between the two. In a sense a deposit is also a loan with this difference that it is a loan with something more. Both are debts repayable. But when the repayment is to be furnished the real point of distinction between the two concepts. A loan is repayable the minute it is incurred. But this is not so with a deposit. Either the repayment will depend upto the maturity date fixed therefor or the terms of the agreement relating to the demand, on making of which the deposit will become repayable. In other words, unlike a loan there is no immediate obligation to repay in the case of a deposit" "A loan imports a positive act of tending coupled with an acceptance by the other side of the money as loan." Referring to these definitions, he contended that loan makes a positive act of lending coupled with an acceptance by the other side of the money as loan. He further contended that the parties whose names have appeared on the loose paper have not admitted that they have given the loans to the assessee. The entire case of the department for holding that assessee has taken these loans in cash is based on the assumption under section 132(4A). Out of all persons mentioned in the loose papers, only one Mr. Patil has admitted that he had arranged the loan for the assessee. No other person has admitted the fact of giving loans to the assessee. Mr. Patil was working as an employee of the assessee from 1987 onwards as per facts mentioned by him in answer to question No. 4 on page 14 of the paper book. Thus, he was a person of no means and he could not advance the loan in lakhs to the assessee. The department did not make further investigation in regard to his statement as he had stated that he had arranged the finances for the assessee from different parties. According to the learned counsel of the assessee, it is a must for the department to establish that in reality the assessee had taken the loans in cash exceeding Rs. 20,000 each. In the present case no person had admitted that he had given loans to the assessee. He further argued that for assessing officer to accept any loan as genuine, three tests are to be fulfilled, viz. the identity of the lender, his capacity and the genuineness of the transaction. Heavy reliance was placed by him on the decision of Calcutta High Court in the case of Shankar Industries v. CIT ( 1978) 114 ITR 689 (Cal). According to him, unless the above tests are satisfied, the assessing officer was not justified in holding that assessee had taken these loans. None of these tests are satisfied because the basic identity confirmation of these parties has not been established by assessee or revenue. Merely on the basis that there were notings in the loose papers, it cannot be held that the assessee had taken loans in reality. Merely on the basis of presumption under section 132(4A), the entries have been considered genuine and true. He further contended that presumption under section 132(4A) is applicable only to the proceedings under section 132 and not to the assessment or penalty. He in this regard places reliance on the following decisions:P. K. Narayanan v. ITO He further raised a contention that mere admission the part of the assessee is not sufficient for levy of penalty. It was necessary for the department to prove the default. He in this regard placed reliance on the decision of the Hon'ble Supreme Court in the case of Sir Shadilal Sugar & General Mills Ltd. v. CIT (1987) 168 ITR 705 (SC); D.Halappa & Sons v. CIT ( 1974) 95 ITR 542 (Mys). He placed heavy reliance on the decision in the case of D. Halappa & Sons (supra) to contend that where the assessee had agreed to the levy of penalty, still it was held not leviable by the court. He further raised a proposition that admission made by the assessee was admission on the point of law which cannot be held to be binding on the assessee. He categorically placed reliance on the Commentary of Chaturvedi & Pithisaria (5th Edition), page 4907 and also on the decision in the case of Banarsi Das v. Seth Kanshiram AIR 1963 SC 1165. He has placed a copy of this order on the file. According to this decision, an admission insofar as facts are concerned would bind the maker of the admission but not insofar as it relates to a question of law. Her further submitted that in the penal provision, the basic offence has to be proved by the department. For this purpose, he has taken an example for levy of penalty in case of late filing of the return. According to him, for levy of penalty in respect of late filing of the return, the assessing officer must show that the return is filed late and therefore, penalty is attracted. He in this regard, placed reliance on the following decisions: (1) CIT v. Anwar Ali (1970) 76 ITR 696 (SC), wherein it has been held that for levy of concealment of penalty, the assessing officer must prove that a particular receipt on which penalty was levied constituted the income of the assessee; (2) CIT v. NA. Mohamed Haneef (1972) 83 ITR 215 (SC) - In this case it has been held that before levying the penalty for concealment the burden is on the department to prove that the receipt involved constituted the income of the assessee; (3) CIT v. Sir Shadilal Sugar & General Mills Ltd. (1972) 86 ITR 776 at 782 (All) - In this case also, Hon'ble Allahabad High Court held that the penalty being of a criminal nature, the facts necessary to attract the provisions must be proved by the department.
Relying on these decisions, he raised a proposition that the burden of proving the default was on the revenue. Without proving the existence of default the penalty levied is bad. He further placed reliance on the observation of the Commissioner (Appeals) in the impugned order contained in para 11. According to these observations, the Commissioner (Appeals) has pointed out that there is a possibility that what the assessee had shown is unaccounted money in the name of various persons.
Referring to these observations, the learned counselocontended that the Commissioner (Appeals) himself has doubted the notings in the loose papers that they may not be loans in reality. Thus also no penalty was leviable.
According to the learned counsel, from the above relevant observations of the learned Commissioner (Appeals) it can be said that there is at least a doubtful issue involved as to whether the penalty is leviable.
If it is so, when there two views are possible on any issue in the context of penalty proceedings, according to well settled law, the benefit of doubt must go in assessee's favour. For this proposition he placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. (1973) 88 ITR 192 at 195 (SC).
He further placed reliance on the decision of the Hon'ble Supreme Court in the case of C.A. Abraham v. IT0(1961) 41 ITR 425 (SC).
He contended that the penal provisions are to be strictly interpreted.
According to him, the meaning of word 'loan' or 'deposit' goes in favour of the assessee because the department has not proved that a particular person has given loan to the assessee. He without prejudice to the above contention, raised another contention that Shri Patil, according to is statement placed at pages 13 to 20 of the paper book had raised the loans through various persons. Shri Patil was only an employee of the assessee drawing salary of Rs. 300 p.m. which was increased over the years to Rs. 1,000 P.m. Thus, he could not be in a position to give so much of the amount in lakhs to the assessee.
Therefore, it was clear that he did arrange these funds from others.
The department has not been able to get any confirmation even from a few persons whose names were mentioned by Shri Patil in the statement.
Thus, it has not been proved that individual each such person has given more than Rs. 20,000 in cash to the assessee. Unless this is established by the revenue, the question of holding that the assessee has violated the provisions of section 269SS does not arise. Thus, he contended that penalty is not leviable in respect of the amount raised by the assessee through Shri Patil. He in this regard placed reliance on the decision of the Tribunal in the case of Sharma Associates v.Asstt. CIT (1996) 217 ITR 1 (Pune) (AT). In the said case, the issue was about the disallowance under section 40A(3) of the cash payments made to the various persons. During the survey, paper was found wherein it was mentioned that the assessee had made the cash payments. These payments were disallowed under section 40A(3). The disallowance was deleted by the Tribunal on the ground that the department has not proved that each of such payments was exceeding the limit under section 40A(3). On the basis of facts of the said case, it is argued by the learned counsel that unless the department proves each individual payment arranged through Shri Patil from the various persons exceeded Rs. 20,000 each, the amount could not be brought within the mischief of section 269SS and hence penalty is not leviable in respect of Rs. 19,77,949 arranged by the assessee through Mr. Patil. In alternative, he also contended that even if it is held that the assessee has taken these loans and violated the provisions of section 269SS, the assessee had taken this money from giving temporary advances to agriculturists who were his clients and who needed the money for their day-to-day expenses. Thus, there was a reasonable cause for taking such genuine finances which were needed urgently for giving it to the agriculturists and therefore, for this reasonable cause the penalty should not be levied. Reliance in this regard was placed on the following decisions (1) Industrial Enterprises v. Dy. CIT (2000) 17 DTC 425 (Hyd-Trib) : (2000) 73 ITD 252 (Hyd-Trib); (2) Chandra Cement Ltd. v. Dy. CIT (2000) 16 DTC 696 (Jp-Trib) : (2000) 68 TTJ (Jp-Trib) 35.
In these decisions, it has been held that if the assessee has taken cash loans to meet the business exigencies, no penalty under section 271D may be levied.
It is also argued that all such transactions were apparently with the agriculturists who do not have the bank accounts etc. and hence the question of invoking the provision of section 269SS does not arise.
Lastly, it was submitted that purpose behind the introduction of section 269SS is elaborated in the circular issued by the Central Board of Direct Taxes. As per the said circular, section was introduced to curb the practice amongst the assessees who used to explain the cash found during search as belonging to various persons by taking confirmation from them. According to the learned counsel, the facts of the assessee's case do not match with the object for introducing of the said section 269SS. Thus, the present case does not fall within the purview of section 269SS because it cannot be inferred from any where that the purpose of section was to cover such presumptive loans also as per the deeming provision of section 132(4A). Thus, according to the learned counsel, this section does not apply to the notings found as per seized papers in this case.
On the other hand, the learned Departmental Representative, contended that the constitutional validity of the provisions of sections 269SS and 269T has been upheld by the Hon'ble Supreme Court in the case of Asstt. Director of Inspection (Investigation) v. Kum. A.B. Shanthi (2002) 29 DTC 791 (SC) : (2002) 255 ITR 258 (SC). He contended that the argument of the learned counsel is not correct to the extent that the provisions of sections 269SS and 269T are applicable only to a situation where cash is found at the time of search. According to the language of section 269SS, no person can take or accept deposit/loan apart from a mode of account-payee cheque/draft. He contended that in respect of violation of such condition laid down by the statute, the intention of the party is immaterial subject to the condition of reasonable cause to be established by a person who has contravened the provisions. He contended that there is basic difference between the provisions of section 271(1)(c) and provision in regard to violation of section 269SS contained in provisions of section 271D. According to the learned Departmental Representative to bring a person within the ambit of section 271D it is necessary to establish the fact and for the purpose of section 2 7 1 (1)(c) it is not necessary for the revenue to prove the factum and even intention to conceal income covers the levy of penalty. Referring to the observations of the Tribunal in the appeal relating to levy of penalty under section'271 E, he contended that there are specific findings of the Tribunal that the assessee had taken loans from various persons. He contended that these observations of the Tribunal are binding being finding of fact found by the fact-finding authority. He contended that in view of the admission made by the assessee in the course of search proceedings and also in the proceedings relating to contravention under section 27 1 E, the department need not to go for further verification to establish that assessee had contravened the provisions of section 269SS. According to the learned D.R. the admission made by the assessee and subsequently acted upon is sufficient to establish the contravention under section 269SS and there was no need to establish a fact which was already established by way of an admission and also by way of documents seized at the time of search. According to the learned Departmental Representative the findings given by the Tribunal in an order against levy of penalty under section 271 E were conclusive and binding on Tribunal and principle of res judicata is therefore, applicable as for it relate to the Tribunal. He in this regard referred to the decision of the Hon'ble Supreme Court in the case of M.M. Ipoh v. CIT (1968) 67 ITR 106 (SC). In this case the Hon'ble Supreme Court held that the assessments and the facts found are conclusive only in the year of assessment. According to the learned Departmental Representative the facts as have been found by the Tribunal relate to the years under consideration and therefore, the principle of res judicata applies to the Tribunal in respect of proceedings under section 271D as well.
He further contended that the case law relied upon by the learned counsel relates to a case law for the provision regarding concealment of income. As pointed out earlier that the provisions under section 271D are not at par with the provisions relating to levy of penalty for concealment, therefore, the case law do not have application to the levy of penalty under section 271 D. He contended that only course available with the assessee is to establish reasonable cause as provided under section 273B. He further contended that presumption as laid out in section 132(4A) is absolute for the purpose of section 132(5) and for the purpose of other proceedings, the presumption is rebuttable. For this proposition, he placed reliance on the following decisions: (1) CIT v. P.R. Metrani (2001) 24 DTC 435 (Karn-HC) : (HUF) (2001) 251 ITR 244 (Karn)Kerala Liquor Corpn. v. CIT He further contended that legislation does not impose any bar on revenue to utilise evidence collected at the time of search in any other proceedings. Further, referring to the decision of the Hon'ble Supreme Court decision given in the case of Chuharmal v. CIT (1988) 172 ITR 250 (SC), he contended that as per section 110 of Evidence Act, 1872 a salutary principle of common law jurisprudence viz. where a person was found in possession of anything, the onus of proving that he was not its owner was on that person, has been recognized and the said principle could be attracted to taxation proceedings in a set of circumstances that satisfy its conditions. He contended that in search proceedings, the assessee had admitted that he had obtained loans in question. Therefore, there was a presumption about the loans being taken by the assessee and it was the onus of the assessee to prove that these were not loans and were not taken by him. He further placed reliance on the decision of the Tribunal given in respect of 27 1 E proceedings in the case of the assessee wherein it has been categorically found by the Tribunal that assessee had raised loans. He contended that these are the findings of fact which have become final.
For summing up his arguments, the learned Departmental Representative contended that on account of repeated admission by the assessee and non-retraction of the said admission, the assessee was liable for penalty under section 271D.On the arguments of reasonable cause, the learned Departmental Representative contended that there was no reasonable cause as has been alleged by the assessee. The transactions were series of transactions.
Bank facilities were available at the place of the business of the assessee. As such there was no reasonable cause existed with the assessee.
In reply, the, learned counsel of the assessee repeated his contention that it was obligatory upon the revenue to establish that the loans were actually raised by the assessee. Unless it was so established, there could not have been any penalty. He further contended that the decision of the Hon'ble Supreme Court in M.M. Ipoh's case (supra) relied upon by the learned Departmental Representative is on the principles of res judicata which is not relevant in the present case as the issue in the present case is regarding establishment of fact. The revenue was required to do something extra than to rely on the admission of the assessee. He further contended that the decision relied upon by the learned Departmental Representative in the case of P.R. Metrani (HUF) (supra) and Kerala Liquor Corpn.'s case (supra) have no application to the facts of the present case as they relate to presumption under section 132(4A). He contended that in the present case, the presumption is applicable and restricted only for the purposes of block assessment and for no other purpose. He further contended that the decision of the Hon'ble Supreme Court in the case of Chuharmal (supra) relied upon by the learned Departmental Representative is not applicable to the penalty proceedings. He therefore, contended that penalty is not leviable. For reasonable cause, he placed reliance on page 6 of his submissions made to the Commissioner (Appeals).
We have careful consideration to the rival submissions in the light of the material placed before us, The main crux of the argument of the learned counsel of the assessee is based on the ground that despite being admission of the assessee, it was obligatory upon revenue to establish by bringing some material on record that the assessee had raised loans in contravention of section 269SS. According to the learned counsel, three ingredients of loans, if not established, it could not be presumed by assessing officer that the assessee raised loans. Heavy reliance in this regard placed on the decision of the Hon'ble Calcutta High Court in the case of Shankar Industries (supra).
The contention of the learned counsel could be correct in the circumstances where there is no admission of having received loans by the assessee. But we are dealing with the case where the assessee has not only made admission during the course of search proceedings but also did not retract to the same even upto the proceedings before us.
The assessee in the present case is highly educated person knowing the intricacies of law. As per the statement recorded in the search proceedings, the qualification of the assessee is B.Sc., LL,B Reference in this regard can be made to statement placed at page 32 of the paper book. Having knowledge of law, assessee was well known to implication and results of such admission made by him before the income-tax authorities in search proceedings. It is not a case where any admission has been made under mistaken belief. Everything found was confronted to the assessee. After giving careful examination of the documents, he had admitted that these are the loans raised by him. The assessee contested the levy of penalty under section 271E only on the ground that the amounts in question were loans and not deposits. The penalty under section 271E is leviable only with respect to deposits and not loans.
In this way, the assessee had accepted again in the proceedings before the Tribunal that the amounts in question were loans and not deposits.
Keeping in view all these facts, we do not see any justification in the argument of the learned counsel that in spite of all these facts, the revenue was under obligation to establish that assessee had raised loans. According to the learned counsel it was a must for assessing officer to call each and every person and to establish his identity, capacity and genuineness of the transaction. In our opinion, this contention of the learned counsel is not correct. The said three ingredients are required to be established only in the circumstances where there is any addition called for in respect of section 68. We are not dealing with a situation enumerated as per section 68. The assessee in the present case has himself agreed that these transactions were loans, therefore, there was no obligation on the revenue to further prove by examining each and every party that those were loans.
Now coming to the case law relied upon by the learned counsel of the assessee, heavy reliance has been placed on the decision in the case of D. Halappa & Sons (supra). According to us, the said case has no relevance to the facts of this case. In the said case assessee agreed for levy of minimum penalty. It was found that the facts warranting levy of penalty do not exist. Therefore, it was held that no penalty is leviable despite the fact that the assessee had agreed for levy of minimum penalty. In the present case, the admission of the assessee was regarding loans obtained and not for levy of penalty thereon. So the decision of Mysore High Court in D. Halappa & Sons' case (supra) has no application to the facts of the case.
Again, reliance has been placed on the decision of Hon'ble Supreme Court in the case of Anwar Ali (supra). This is a case where explanation given by the assessee was found to be false. The income of the assessee was assessed as such. Under these circumstances, it was held that the finding given in an assessment proceedings for determining or computing the tax may be a good evidence but before penalty can be imposed the entirety of the circumstances must reasonably point to the conclusion that the disputed amount represent income and that assessee had consciously concealed the particulars of his income or deliberately furnished inaccurate particulars. In the present case, the explanation of the assessee has not been found to be false and was accepted by the department that the assessee had obtained loans. Thus the ratio of this decision has no application to the facts of the case as it has always been the case of the assessee in Anwar Ali's case (supra) that the amount was not the income of the assessee.
Now coming to the case of Sir Shadilal Sugar & General Mills Ltd. (supra), in the said case, assessee had agreed to the addition of certain sums to maintain good relation. In those circumstances, it was found by the Hon'ble Supreme Court that penalty was not leviable. In the present case, it is not the case of the assessee that he had given a statement regarding obtaining loans to maintain good relations with the department. What he had stated before the authority was the factual position which was admitted on the face of it by the revenue. Thus, this case also has no application.
Now coming to the case law relied upon by the learned counsel for the proposition that presumption under section 132(4A) is applicable only for the purpose of section 132 and not for the purpose of assessment.
The case law has been mentioned in preceding paragraphs of this order.
We have considered the submissions of the learned counsel in this regard. The decision in the case of Pushkar Narain Sarraf (supra) does not support the case of the assessee as in the said case, it was held by the High Court that presumption under section 132(4A) do not exclude section 68 when regular assessment is made in regard to the income of the person from whose possession those books of account were seized under section 132. In the present case, the proceedings carried out are not assessment proceedings but it relate to levy of penalty under section 271D.The decision relied upon by the learned counsel in the case of Smt.
Shanti Devi (supra) is also not applicable to the facts of the present case as in the said case, assessee had denied any link or connection with the loose sheets in the form of sworn affidavit and the assessing officer did nothing to establish its connection with the assessee. In the present case it has never been denied by the assessee that the transaction recorded in the seized documents were not loan obtained by him.
In the case of T. Mudduveerappa Sons (supra) also, assessee had denied that it earned secret profit and that the documents seized belongs to it. So this case also is not applicable to the present case.
The decision in the case of Miss Rose Ben (supra) is also not applicable. The assessee in the said case had stated that she is only carrier of gold and received commission in such capacity. Under those circumstances, it was held that onus was on department to prove that assessee was owner of gold and the department having not discharged the onus, the assessee could be assessed only on her commission. The decision in the case of Amar Natvarlal Shah (supra) also has no application to the facts of the present case. The assessee had explained that the entries recorded in the loose papers was representing money taken for purchasing all flats constructed by the firm. The explanation of assessee was rejected and addition was made after decoding the figures mentioned in the loose papers multiplying by either 1000 or 1,00,000. In the said case, assessing officer had changed his stand frequently by decoding figures mentioned in the seized figures. Thus it was held that the assessing officer was not justified to make the impugned addition.
. The decision in the case of Raj Pal Singh Ram Avtar (supra) is also not applicable as the loose papers seized contained certain figures, rate and consequent calculation - It does not bear any name - assessee categorically explained that it did not belong to him and also explained that it was not in the handwriting of any of the partners or employees or any connected person. Under these circumstances, it was held that initial onus lying upon the assessee was discharged. The facts in the present case are different.
The facts in the case of D.K. Gupta (supra) are also different as the said case does not have any application to the present case. In the said case, it has rather been held that even without the applicability of presumption, initial onus of proving that assessee was not the owner of seized material was on assessee. It was found by the Tribunal that assessee had nothing to do with the expenditure recorded in the seized material and thus the amount could not be added. There was no evidence on record to establish that the properties indicated in the seized papers were not owned by the assessee and stood let out. Thus looking into the facts of the said case, the ratio laid down therein has no application.
Facts in the case of P.K Narayanan (supra) are also different. In the said case, the findings in the assessment order were based on presumption which were held not constituting a good piece of evidence for the purpose of levy of penalty. Here in the present case, assessee had admitted that he had taken loans. Thus the ratio laid down by the said decision has no application on the facts of this case.
Further regarding reliance of the assessee on views expressed by Commissioner (Appeals) in para 11 also do not support the case of the assessee that as Commissioner (Appeals) has merely expressed the possibility and has not given any definite findings. Here in the present case, we are dealing with the situation in which the assessee had made a categorical admission and maintained such admission through all the proceedings. The admission made is not retracted at any stage till date. The law relating to admission is well settled that what is admitted by a party must be presume to be true unless contrary is shown. Reference in this regard can be made to the decision of the Hon'ble Supreme Court in the case of Nathoo Lal v. Durga Prasad AIR 1954 SC 355. However, it is open to the assessee who made the admission to show that it is incorrect and the assessee should be given proper opportunity to show that. In the present case, no such attempt has been made by the assessee that admission made by him is incorrect. In absence of any denial or explanation therefor, the admission is almost conclusive regarding the facts contained therein. Moreover, it is a case where assessee obtained a benefit by making certain representation to the taxing authority in one proceedings, he cannot be permitted to deny the truth of representation in another proceedings at a later stage because the authorities viewed his position to his disadvantage by reason of the representation. Following observations of the Bombay High Court in the case of CIT v. Army and Navy Stores Ltd. (1957) 31 ITR 959 (Bom) will be relevant to be reproduce: "It is difficult to understand how the assessee can be permitted to deny the truth of the representation made by it in its letter of the 24-11-1946, when on the strength of it obtained a certain benefit and when on the strength of it the Taxing Department relieved it of a certain obligation. The Taxing Department having changed its position to its prejudice by reason of this representation, the assessee company cannot be permitted to deny the truth of that representation when the question arises of assessing its refund to tax under the proviso to section II(II)" At page 4909 of Chaturvedi and Pithisaria's Commentary, 5th edition, it has been mentioned that to sum up law relating to admission, the admission is the best evidence that an opposing party can rely upon and though not conclusive, is decisive of the matter, unless successfully withdrawn or proved erroneous. This conclusion is based on the following authorities:Narayan Bhagwantrao Gosavi, Balajiwale v. Gopal Vinayak Gosavi AIR 1960 SC 100, 105;Ramji Dayawala & Sons (P) Ltd. v. Invest Import AIR 1981 SC 2085, 2093;Sterling Machine Tools v. CIT This is so because an admission by a party is substantive evidence of the fact admitted, and admissions duly proved are admissible evidence irrespective whether the party making them appeared in the witness box or not and whether that party when appearing as witness was confrorted with those statements in case it made a statement contrary to those admissions:Union of India v. Moksh Builders & Financiers Ltd. AIR 1977 SC 409, 415;Bharat Singh v. Bhagirathi AIR Further, if the admission is clear and unequivocal it is not only the best evidence against the person making it but shifts the onus on the maker on the principle that what a party himself admits to be true may reasonably be presumed to be so and until the presumption was rebutted the fact admitted must be taken to be established. Reference in this regard is made to the decision of the Hon'ble Supreme Court in the case of Thiru John v. Returning Officer AIR 1977 SC 1724, 1726-7. The above legal position regarding admission has been taken from pages 4907 to 4909 of Chaturvedi and Pithisaria's Commentary, 5th Edition, which was relied upon by the learned counsel of the assessee.
Viewing from this legal position, it can well be said that in presence of admission by the assessee that the transactions in question were loans taken by him, the initial onus which was on the revenue was shifted on assessee to prove that what he had stated is not true and transactions were not loan. No such attempt has been made by the assessee. Therefore, the argument that the department must prove that transactions in question were loans taken by the assessee must fail. We also do not find any substance in the arguments of the learned counsel that presumption under section 132(4A) is not available in penalty proceedings. Here in the present appeal, it is not a question of presumption but it is a question of admission of fact by the assessee.
It is always open to the revenue to refer the material found at the time of search. Here in the present appeal, there is no question of presumption. Here reference can be made to the decision of the Hon'ble Kerala High Court in the case of Kerala Liquor Corpn. (supra), the case relied upon by the learned Departmental Representative that the provisions of section 132(4A) spells out the presumption that the documents belongs to the person from whom they are seized and their contents are true. In addition it must be stated that these aspects were not denied. The facts were very clear and did not require the aid of any presumption. Thus, in the present case, there is no question for application or non-application of section 132(4A).
Similarly, we find no force in the contention of the learned authorised representative that the admission made by the assessee admission of law. In our opinion, what the assessee admitted was admitted of fact and not admission of law.
Now coming to the plea of the assessee that penalty should not be imposed in respect of the amount relating to Shri Vishnu L. Patil. It is the contention of the assessee that the said person was employee of the assessee who had been drawing a salary of Rs. 300 p.m. to Rs. 1,000 p.m. and he could not be in a position to give so much amount to the assessee, It is also argued that in his statement, he has stated that he had obtained these loans for assessee from various persons. On the basis of this statement, the assessee has sought the benefit for non-levy of penalty. We have carefully considered this submission of the assessee. We have also gone through the statement of Shri Vishnu Laxman Patil which is appearing at pages 13 to 20 of the paper book. It will be wrong to say that said Shri Vishnu Laxman Patil was not in a position to give so much of the amounts though he admitted that he was collecting money from different persons and depositing the amounts in his bank account and giving cheques but he was unable to tell that how much amount was collected from which person. He could not spell out the names also. He was having an independent bank account. In his statement, he repeatedly had admitted that he do not remember that to whom these sums belong. Reference in this regard can be made to the answers to question Nos. 6, 10, 18. Said Shri Vishnu Laxman Patil was giving acknowledgements about receipt of money with his name and signature and also taking the signature of the assessee while giving money to him. Reference in this regard can be made question No. 16. He was also holding the money-lending licence which was taken in 1991.
Besides licence, he was a man of means. The provisions of section 269SS take into consideration 'any person'. Thus, the transactions of the assessee with Shri Vishnu Laxman Patil were the transactions with ,any person', Shri Vishnu Laxman Patil was not an exception. Therefore, the argument of the assessee that penalty is not leviable with respect to transactions relating to Shri Vishnu Laxman Patil, is not acceptable.
Similarly, the argument that the amount relating to various persons is also not acceptable as in spite of repeated questions, he could not tell the names of the various persons and to specify the sums obtained from them.
Further coming to alternative contention of the assessee that there was a reasonable cause for accepting or taking these loans. This argument of the assessee also holds no ground. This argument has been taken on the strength that the assessee has taken these loans for giving temporary advances to agriculturists who were his clients and who needed the money for their day-to-day expenses. Reliance in this regard has been placed on the following decisions: (a) Chandra Cement Ltd.'s case (supra). We have gone through this decision. The ratio of the said decision cannot be applied to the present case. In the said case, one 'G' was a promoter-director, who utilised his own money for the purposes of incorporation of the company, purchase of land, plant and machinery, construction material and so on, when the company was awaiting disbursement from financial institutions, and it was taken back later on. These are not the facts in the present case. Here, the transactions of the assessee were with other persons. The persons being clients cannot be equated as a promoter-director of the said company.
(b) Industrial Enterprises' case (supra). We have also gone through the decision in this case. As per the facts of this case, the assessee had been able to secure loans sanctioned by banks and financial institutions. These loans had not come in time. In compelling circumstances, the assessee accepted the cash loans from friends as and when emergency arose. Thus, the provisions of section 271D were not held to be applicable. In the present case, no such exigency has been established. Therefore, the said decision is also of no help to the assessee.
As the assessee in the present case has violated the provisions of section 269SS, thus penalty was leviable under section 271D. In view of the legal and factual position discussed above, we find no infirmity in the decision of the Commissioner (Appeals) vide which penalty levied upon the assessee has been upheld. We confirm the order of the Commissioner (Appeals).