| SooperKanoon Citation | sooperkanoon.com/61970 |
| Court | Income Tax Appellate Tribunal ITAT Madras |
| Decided On | Mar-31-1986 |
| Judge | D Meenakshisundaram, G Raghavan |
| Reported in | (1986)16ITD529(Mad.) |
| Appellant | First Income-tax Officer |
| Respondent | P. Palaniswamy |
2. These appeals arise out of the common order of the Commissioner (Appeals) cancelling the penalties levied by the IAC (Assessment), Range-I, Salem-4, against the assessee for the five assessment years 1974-75 to 1978-79 under Section 271(l)(c) of the Income-tax Act, 1961 ('the Act'). The amounts of penalties levied by the IAC are the following :Assessment year Penalty levied Rs.1974-75 92,6901975-76 57,1301976-77 42,3201977-78 45,7751978-79 39,550 These penalties were levied by the IAC for alleged concealment of particulars of income within the meaning of Section 271(1)(c) with reference to the additions made to the income of the assessee in each of these years.
The IAC rejected the contentions of the assessee that he had not concealed any particulars of his income nor furnished any inaccurate particulars of the same, to justify the imposition of a penalty under Section 271(l)(c) for any of these years. He further rejected the assessee's plea that the income added in his hands in the assessments made as an individual, really represented the income of his HUF of which he was the karta. He further did not accept the plea of the assessee that the additions made were purely on an estimated basis as against the income declared by the assessee, no doubt on an estimated basis, made in the absence of the materials which were seized by the department on 18-2-1978 and kept by the department, in their custody.
He also did not agree with the assessee that no penalty would be leviable for the estimated additions made to the assessee's income in all these years.
3. The IAC pointed out that a search under Section 132 of the Act was conducted in the premises of the assessee on 18-2-1978 and that in the course of the said search certain investments and income derived therefrom which were not disclosed by the assessee in his returns of income came to light. He pointed out that consequent to these proceedings the assessments of the assessee were reopened under Section 147(a) of the Act to bring to tax the income which had escaped assessment and that such reassessments were completed determining the total income of the assessee at a much higher figure than the income originally returned by the assessee for each of the years. The IAC pointed out that in the course of the reassessment proceedings the assessee's claim that the investments during the year as well as the income derived therefrom belonged to the joint family was subjected to detailed scrutiny, that the assets belonging to the HUF, both ancestral as well as subsequent acquisitions, were duly ascertained and a fair estimate was made, the estimate being unavoidable in the absence of any accounts maintained by the assessee of income derived from such assets from year to year. He further held that the investments made during the years were attributed to the joint family to the extent of availability of resources for the family and the remaining investments alone were considered in the hands of the assessee in his separate capacity.
Similarly, with regard to the availability of funds for the investment the claim of the assessee as regards income derived from plying of lorries and buses, interest income from loans advanced and the income derived from cultivation of lands, and also funds available by way of borrowings during the year were fully examined and such claims had been accepted for the most part and that only the excess of investments and repayments towards loans during each year over the known sources of funds were brought to tax under the residual head as 'Income from undisclosed sources'. The IAC held that the estimate made with regard to the apportionment of investments during each year as between joint family and the assessee in his separate capacity were fair and reasonable would be evident from the fact that the assessee accepted such estimates and did not choose to contest them in appeal.
4. The IAC. therefore, held that the presumptions raised by the Explanation to Section 271(1)(c) in the first two years and under Explanation 1 to Section 271(1)(c) for the remaining three years were attracted by the case of the assessee, that, consequently, the burden of proof was on the assessee to rebut the presumption raised against him in each of these years and that the assessee failed to rebut the said presumption. The IAC pointed out that the assessee was unable to disgharge the onus cast on him and that all that he could state in his defence was that no concealment had been proved and that the additional income brought to tax was on account of partial non-acceptance of his explanation and that the income returned as well as the income assessed were based on estimate. The IAC held that the additional income brought to tax in all these years was with reference to the investments admittedly made by the assessee during each of the years and after a consideration of all known sources of income for such investment. He pointed out that the only point on which an estimate was necessitated was with reference to the apportionment of investments between the joint family and the assessee and that even here the estimate was occasioned by the assessee's failure to maintain any accounts and the assessee's inability to establish that these investments were made by the joint family. He also relied on the fact that such estimates were made only after a due consideration of all the issues raised by the assessee and the additional income brought to tax based on such estimate had been agreed to by the assessee and that no appeal had been filed against such assessments. Finally, the IAC pointed out that the facts that for all his claim that the money-lending business right from the inception belonged to the joint family, the assessee had never bothered to file returns for the joint family even though the interest income derived from such money-lending business was substantially in excess of the non-taxing limit for several years. He was of the view that the returns for such HUF for all the years from 1969-70 to 1977-78 furnished simultaneously on 13-3-1978 was clearly a sequel to the search in the assessee's premises on 18-2-1978 and that this conduct on the part of the assessee was a clear pointer to the fact that the assessee's present claim of the entire money-lending business belonging to the joint family was not founded on facts, but only an after-thought prompted by the discovery of investments and income hitherto undisclosed as a result of search under Section 132 in the present case. The IAC, therefore, held that the assessee was guilty of concealment of particulars of his income in all the years and accordingly levied the penalties set out earlier in paragraph 2 of this order.
5. The assessee preferred appeals to the Commissioner (Appeals) and contended that there was no case for levy of penalty under Section 271(1)(c) for alleged concealment of income for any of these years.
6. The Commissioner (Appeals) examined the assessee's contentions in great detail and came to the conclusion that the impugned penalties were not warranted for the following reasons set out in paragraph 5 of his appellate order : (i) At the time when the appellant is purported to have first launched out into a business venture, which according to him was for his exclusive benefit and not for the benefit of the joint family of which he is the karta, he was not known to have had any separate funds of his own, whereas the family then stood possessed of 13.30 acres of wet land and these holdings were augmented by further acquisitions of 21.56 acres of dry land between 1969 and 1973.
(ii) No accounts were maintained either by the joint family or the appellant, so that the question as to which of the two entities owned this or that asset, income yielding or otherwise, which stood in the appellant's name involved a very considerable element of guesswork. The fact that the assets, viz. motor vehicles, promissory notes, hire-purchase documents, and investments, all stood in the appellant's name was obviously inconclusive, for a joint family more often than not acquire property in the name of one of its members, usually the karta and rarely if ever in the name of the family itself.
(Hi) Looking to the smallness of the appellant's personal income as disclosed by his tax records for the years 1956-57 to 1972-73, relative to the probable income of the family from its agricultural lands during the same period, the ownership of the assets in question, viz., the money-lending and hire-purchase businesses, buses and lorries and other investments, could more easily have been attributed to the family than to him and in this connection the family's omission to file tax returns, does not in my mind, as the IAC has tried to make out, lead to an inference adverse or otherwise to the appellant. Indeed it seems to me on a broad appraisal of the pertinent facts, that there could well have been a case for hiding that the entire income assessed in the appellant's hands, whether admitted to be his, or treated as such by the IAC belonged to the family for the simple reason that to begin with the family did have a nucleus of property capable of generating income for both expenditure and accumulations, while the appellant did not.
(iv) An analysis of the additions made in all the five years would show that the additions were made up of (i) deemed income under Section 69, (ii) estimated additions to the income which admittedly belonged to the appellant, (iii) estimated income from the money-lending, hire-purchase financing and transport business which according to the appellant belonged to the joint family. Insofar as the income under Section 69 is concerned, such income is deemed income, for as pointed out in Jatindranath Sharma v. ITO [1978] 113 ITR 898 and CIT v. Noorjahan 123 ITR 3, the section merely gives discretion to the Income-tax Officer to deem the value of the unexplained investments referred to therein as income. When the Income-tax Officer in his discretion treats an amount as income by recourse to Section 69, the fact that he does so and nothing more would hardly suffice to sustain a finding of concealment or fraud.
Additions on estimate would stand in the same footing and so would additions resulting from an arbitrary allocation of income yielding assets between two units of assessment, to either of which, on the materials available the ownership of all or any of those assets, could, with equal plausibility, be attributed.
(v) The circumstances that the assessments and reassessments were concluded with the acquiescence of the appellant cannot be held against him.
According to the Commissioner, when a matter was settled by compromise as it had been in the instant case, no presumption arose that by so doing, any of the parties concerned had admitted the correctness of the facts necessarily implied by the terms of the settlement.
7. The Commissioner (Appeals) then examined the legal position with reference to the Explanation to Section 271(l)(c) which has been relied on almost exclusively by the IAC to justify the penalties. After setting out the relevant passages in extenso from pages 1112 and 1113 from the commentary of the learned authors Kanga and Palkhivala in the Law and Practice of Income-tax, Seventh edn., Vol. I, the Commissioner (Appeals) held that the second line of approach Would appear to have been adopted by the Madras High Court in Addl. CIT v. Smt. V.Kanakammal [1979] 118 ITR 94 and that if the same principle was to be applied here, there could be no scope for doubt that the Explanation could have been, on the relevant facts and circumstances of the case, no assistance to the IAC, for the purpose of supporting the penal imposts in question. According to the Commissioner, the additions on account of (j) the unexplained investments, (ii) the income from money-lending business, and (in) the income from transport business were made merely because there was no proof acceptable to the department, in regard to the ownership of the aforesaid investments and business. He, therefore, cancelled the penalties and allowed the assessee's appeals. The revenue feels aggrieved by these orders of the Commissioner (Appeals), and, hence, the present appeals to the Tribunal.
8. Shri Martin David, the learned departmental representative took us through the orders levying penalties passed by the IAC, and the appellate order of the Commissioner (Appeals) and pointed out that in the present case the old Explanation to Section 271 (l)(c) as inserted by the Finance Act, 1964 with effect from 1-4-1964 would be applicable for the first two assessment years 1974-75 and 1975-76 and that for the remaining three assessment years 1976-77 to 1978-79, Explanation I to Section 271(l)(c) as substituted by the Taxation Laws (Amendment) Act, 1975, with effect from 1-4-1976 would be applicable to the facts of the present case. Shri Martin David argued that the Commissioner (Appeals) has overlooked this vital distinction in the provisions of law applicable to these two sets of assessment years and that further the assessee had not discharged the burden of proof under these Explanations in each of these years. The learned departmental representative pointed out that the returned income for the first two years by the assessee was less than 80 per cent of the total income assessed and that, therefore, it was for the assessee to establish that there was no fraud or gross or wilful neglect in returning the correct income. Regarding the remaining three assessment years, the learned departmental representative contended that under Explanation 1 to Section 271(l)(c) it looked as if that the levy of penalty was almost automatic as held by the Madras High Court in the case of CIT v.Imperial Automobiles [1983] 141 ITR 60 at p. 65. The learned departmental representative further submitted that the Commissioner erred in his conclusion that merely because in the assessments additions to income were made either under the deeming provisions of Section 69 of the Act or by estimating the additions from the various sources of income it would not mean that no penalty would be exigible.
He argued that the department would be still justified in imposing the penalties on the authority of the Orissa High Court in CIT v. Ganpatrai Gajanand [1977] 108 ITR 403. Shri Martin David further relied on the decisions in Addl.ClT v. E. Bhoopathy [1978] 113 ITR 188 (Mad.) and CIT v. Krishna & Co. [1979] 120 ITR 144 (Mad.). The learned departmental representative also relied on the findings of the IAC that the assessee had accepted the additions made in his individual hands as he had not filed any appeals against the assessments made on him. He, therefore, argued that it was not open to the assessee to contend that no penalty was exigible in his hands. Shri Martin David, therefore, submitted that the orders of the Commissioner (Appeals) cancelling the penalties should be reversed and the orders of the IAC imposing the penalties should be restored.
9. Shri Ramagopal, the learned counsel for the assessee, relied on the findings of the Commissioner (Appeals) in his order under appeal and contended that the decision cancelling the penalties on the facts of the present case was correct and that the same should be upheld. He pointed out that in the present case we are concerned with the individual assessments of Shri Palaniswamy and not with the case of the HUF of Shri Palaniswamy consisting of Shri Palaniswamy as karta and his two sons. The learned counsel referred us to the facts of the assessee's case starting from the assessment year 1965-66 to the assessment year 1973-74 and the subsequent history set out in the first four paragraphs of the appellate order of the Commissioner (Appeals) and pointed out that it was clear from these facts that the assessee as an individual did not have any substantial source of income and that on the contrary it was the HUF which had a real source of income, namely, agricultural lands yielding substantial income. In this connection Shri Ramagopal relied on the statement of the assessee recorded by the ITO on 1-6-1972 at pages 44 to 46 of the paper book. He particularly relied on the answer to question No. 5, which is quoted below : Question 5 : Where do you keep your past savings from business and agricultural savings Answer : I have been keeping my funds only in my house. I have lent some amount for interest out of agricultural income on short terms.
My agricultural lands were ancestral and I am the karta of the family which consists of myself and two sons aged 20 and 18 years. I have no bank accounts.
The learned counsel further relied on the assessment order for the year 1974-75 dated 29-6-1981 in the case of the present assessee wherein the ITO has accepted the factual position that the HUF of the assessee had a nucleus of Rs. 1,16,700 which was invested in money-lending business during the relevant previous year. He further relied on the finding of the IAC in the assessment year 1978-79 accepting the resources of the HUF to the extent of Rs. 1,92,000 as on 31-3-1978. The learned counsel also relied on the wealth-tax assessment at page 33 of the paper book for the assessment year 1975-76 wherein the investments of the HUF in money-lending business as on 31-3-1975 was held to be in the sum of Rs. 1,54,700. According to Shri Ramagopal, these findings clearly established that the resources and properties of the HUF of the assessee were quite substantial even at its very inception and that it was only out of the said HUF funds the assessee was able to build up the various investments in his money-lending business, hire-purchase business and lorry and bus transport business. He, therefore, argued that the entire income assessed in the hands of the individual were only from the HUF sources and that even the seized materials at the time of search did not establish that the assessee in his individual capacity did have any separate source of income apart from his HUF funds. According to Shri Ramagopal, it was a case of partial acceptance of the assessee's case and also partial disbelief and rejection of his case by the department. Shri Ramagopal relied on the decision of the Supreme Court in the case of V.D. Dhanwatey v. CIT [1968] 68 ITR 365 where the Supreme Court held that before an acquisition by the karta of a HUF can be claimed to be his separate property, it must be shown that it was made without any aid or assistance from or detriment to the ancestral or joint family property. He further relied on the decision of the Delhi High Court in the case of CIT v. Charan Dass Khanna & Sons [1980] 123 ITR 194 wherein it was held that the investment of money by the coparceners after obtaining loans from the family in a new business was a significant factor though not the only determining criterion to decide whether the business belonged to the family and its income was liable to be clubbed in its hands and that it had also to be ascertained whether that new business and the earning of such income therefrom would be overwhelmingly attributed to the specialised skill and enterprise of the coparceners and that in case the investment part of the family funds was the main factor resulting in the set up of the new business and its profitability then the income might have to be ascribed to the family. Relying on these two decisions, Shri Ramagopal argued that the facts of the present case clearly established that the entire income that has been added in the hands of the assessee in his individual capacity really belonged to his HUF and that therefore there was no question of any concealment of income by the assessee in his individual capacity. Shri Ramagopal argued that it was always open to the assessee in the course of the penalty proceedings to point out facts which are already on record to show that he was not guilty of any concealment of income or furnishing of inaccurate particulars of such income within the meaning of Section 271(1)(c) and that it was not necessary for the assessee to adduce any fresh evidence in support of his claim.
10. Shri Ramagopal next relied on the decision of the Patna High Court in CIT v. Novelty Bar & Restaurant [1985] 154 ITR 338 to contend that if the explanation of the assessee was found to be plausible there would be no justification for levy of penalty even if the Explanation to Section 27l(l)(c) is held to be applicable. He next relied on the decisions of the Punjab and Haryana High Court in CWT v. Jagir Singh [1985] 154 ITR 633 and CIT v. Mehar Singh [1985] 154 ITR 637. Shri Ramagopal next relied on the decision of the Madras High Court in CIT v. Jayashankar Traders [1983] 144 ITR 208, wherein the effect of the Explanation to Section 271(1)(c) was considered. The scope of burden of proof under the said provision of law was also examined by their Lordships of the Madras High Court who pointed out that the Explanation to Section 271(1)(c) only raised a rebuttable presumption which could be displaced by relying upon the materials available on record in the penalty proceedings irrespective of whether it was produced by him or by the revenue. The next decision relied on by Shri Ramagopal was the one in the case of K.R.S. Gurumurthy Pathar v. CIT [1974] 96 ITR 404 (Mad.) at p. 407 to point out that it is always open to the assessee with reference to the materials on record that the properties in question and the income therefrom did not belong to the assessee in his individual capacity, but to his HUF and that, therefore, no penalty is leviable on him as an individual.
11. Regarding the remaining three assessment years 1976-77 to 1978-79, the learned counsel submitted that the assessee's case would fall within the proviso to Explanation I to Section 271(1)(c). Shri Ramagopal pointed out that Clause (A) of Explanation 1 was not applicable to the present case as it is not a case where the assessee had failed to offer an explanation or where his explanation has been found to be false by the departmental authorities. He pointed out that the assessee's case would fall within the scope of Clause (B) of Explanation I, as the assessee has not been able to substantiate his explanation to the satisfaction of the departmental authorities and that it was a case of rejection of the assessee's explanation in part and that, therefore, the assessee would be entitled to the benefit of the proviso to Explanation 1 to Section 271(1)(c). Shri Ramagopal, therefore, argued that no penalty was leviable in the present case for any of these five years and that they have been rightly cancelled by the Commissioner (Appeals).
12. Alternatively, Shri Ramagopal submitted that, if we are to hold that penalty is leviable in the present case, it would be necessary to determine the concealed income with reference to which the penalty is leviable. He pointed out that the assessee had filed his returns of income for all these years on an estimate basis since all the materials were seized and carried away by the departmental authorities who would not allow any inspection of the seized materials to the assessee to enable him to file his returns of income correctly. For this, Shri Ramagopal relied on the assessee's letter dated 28-8-1978 at page 43 of the paper book and the letter dated 18-2-1980 filed by the assessee with his returns of income for the assessment years 1976-77 to 1978-79.
He, therefore, submitted that it was a case of one estimate of income made by the assessee against which the department made further estimates of income or deemed income, but there was certainly no question of proved concealed income on the part of the assessee, the individual. In support of these arguments, the learned counsel relied on the decision in the case of CIT v. N. Sowbhagmull Mahavirchand [1983] 142 ITR 747 (Mad.), wherein it has been held that the provisions of Section 69A of the Act by themselves cannot support an order of penalty, and that on the facts found by the Tribunal based on the materials before it the Tribunal is entitled to fix the quantum alike of the estimated addition in the assessment on account of unexplained investment and the question of penalty on account of concealment of income. He next relied on the decision in the case of M. Radhakrishniah v. CIT [1984] 147 ITR 133, wherein their Lordships of the Madras High Court have held that by merely relying on the Explanation to Section 271(l)(c) or by reference to Section 68 of the Act, in which unexplained cash credits can be presumed to be income for purposes of assessment of tax, a penalty cannot be sustained under Section 271 (1)(iii). Shri Ramagopal also referred us to the decision of the Kerala High Court in CIT v. Smt. P.K. Noorjehan [1980] 123 ITR 3, wherein it has been held that the unsatisfactoriness of the explanation given by the assessee need not and did not automatically result in deeming the value of investment to be the income of the assessee and that it was still a matter within the discretion of the ITO and, therefore, of the Tribunal. The learned counsel pointed out that it was a case which arose under Section 69 relating to unexplained investments.
13. The learned counsel submitted that the two decisions of the Madras High Court relied on by the learned departmental representative in E.Bhoopathy's case (supra) and Krishna & Co.'s case (supra) were inapplicable to the facts of the present case. The learned counsel pointed out that in the first case it was a case of a contractor who did not maintain any books of account and the assessee was unable to substantiate either the basis of his estimate or show that it was bona fide or proper. He submitted that this case turned on its own facts and, therefore, inapplicable to the facts of the present case.
Regarding the second case of Krishna & Co. (supra), the learned counsel submitted that it was a case of an admission on the part of the assessee regarding a certain amount of income. It was in the context of those facts it was held that no further evidence could be necessary to show that this amount represented the concealed income of the assessee.
The learned counsel pointed out that in the present case before us, the assessee has been contending throughout that the income in question represented the income of his HUF and not his individual income and that it was a case of rejection of the explanation by the departmental authorities for want of satisfactory proof. He, therefore, submitted that this decision also would be inapplicable to the facts of the present case. He, therefore, submitted that the order of the Commiss ner (Appeals) cancelling the penalties was correct and that the same should be confirmed.
14. Shri Martin David, the learned departmental representative in his reply invited our attention to the decision of the Gauhati High Court in Jatindra Nath Sarmah v. ITO [1978] 113 ITR 898 to contend that there was no burden on the revenue to prove while applying Section 69 that unexplained investment represented the income of the assessee.
15. We have carefully considered the submissions urged on both sides in the light of the materials and the authorities placed before us.
16. In our view, the decision of the Commissioner (Appeals) cancelling the penalties in all the five years, is right and that the same has to be upheld. It is clear from the facts set out in the order of the Commissioner (Appeals) that it was the case of the assessee right from the inception that the investments found at the time of search on 18-2-1978 really belonged to his HUF and not to him as an individual.
The materials placed by the assessee's learned counsel show that the additions made to the assessee's income in each of these years represented either estimated additions as income from lorry or buses or from money-lending business or as an outgoing or an investment which was deemed as income under Section 69. The comparative particulars given at pages 4 to 6 of the assessee's paper book clearly bring out that these identical amounts were also assessed in the hands of the HUF of the assessee for all these five years though on a protective basis.
This shows that the department itself was unable to make up its mind and take a definite stand about the ownership of these investments or the sources of income noticed by them at the time of search. It was stated by the learned counsel for the assessee before us that the assessee did not file any appeals against his individual assessments for these years as the difference in taxes, whether as an individual or as an HUF was not very substantial and that, therefore, he decided to accept the assessments made on him as an individual for all these years and that no adverse inference can or should be drawn against him from this fact alone for purposes of penalties under Section 271(l)(c).
17. We have already referred to the sworn statement of the assessee recorded by the ITO on 1-6-1972 at pages 44 to 46 of the assessee's paper book. We have also quoted question No. 5 put by the ITO and the assessee's answer in reply thereto. In fact, a perusal of this statement as a whole establishes that the assessee has been stating before the department long before the search in June 1978, that he was the karta of his HUF consisting of himself and his two sons, that his HUF owned substantial agricultural lands as ancestral properties and further acquisitions of agricultural lands out of the income from agriculture and also from money-lending carried on short-term basis, out of such agricultural income. It is for these reasons apparent that the department could not reject outright the explanation offered by the assessee that all the investments either in his money-lending business or in his hire-purchase or lorry or bus business, came out of his HUF funds. We have already referred to the findings of the IAC accepting the assessee's claim that the investments made by the HUF amounted to Rs. 1,17,000 as on 1-4-1973, Rs. 1,54,700 as on 31-3-1975 and Rs. 1,92,000 as on 31-3-1978 with reference to the various assessment orders, copies of which have been filed before us in the assessee's paper book. These facts clearly establish that there was substantial ancestral HUF nucleus out of which the assessee could have made and acquired all these investments in various businesses, as his own individual resources were negligible. This is established by the assessments made on him for the assessment years 1965-66 to 1972-73. We are not referring to 1973-74 figures as it is stated that the addition of Rs. 1,44,769 made in that year is the subject-matter of appeal which is still pending before the appellate authorities. It is on these facts the Commissioner (Appeals) has rightly come to the conclusion that the explanation of the assessee that all these income added in his hands really belonged to his HUF, is quite plausible. The assessee's contentions are supported by the decision of the Supreme Court in V.D.Dhanwatey's case (supra) and the decision of the Delhi High Court in Charan Dass Khanna & Sons' case (supra) relied on by the learned counsel for the assessee.
18. When we examine the facts of the present case in the light of the authorities cited on both sides, it is clear that the assessee must be held to have discharged his burden of proof to displace the presumption raised against him under the Explanation to Section 271(l)(c) for the assessment years 1974-75 and 1975-76. We are supported in our conclu-tion by the decisions of the Madras High Court relied on by the learned counsel for the assessee. We are unable to agree with the revenue that it is necessary for the assessee to produce any fresh material to rebut the presumption raised by the Explanation to Section 271(1)(c) as it is now well settled that it is always open to the assessee to rely on the materials and evidence brought on record either by him or the department in the course of the assessment proceedings and point out that he is not guilty of fraud or gross or wilful neglect in returning the correct income. In the present case this is what exactly has happened as could be seen from the findings of the Commissioner (Appeals) in paragraph 5 of his appellate order, which we have quoted above. Apart from relying on the presumption raised by the Explanation to Section 271(l)(c), the revenue has been unable to point out anything wrong in the conclusions of fact drawn by the Commissioner (Appeals). It is no doubt correct to say that the findings recorded in the assessment proceedings would certainly constitute good evidence in favour of the revenue and against the assessee ; but it is equally true and valid in law that those findings are not conclusive so far as penalty proceedings are concerned and the assessee is at liberty to challenge those findings in the course of the penalty proceedings and to establish with reference to the materials already on record that he is not liable to be visited with a penalty under Section 271(l)(c) for alleged concealment of income or furnishing of inaccurate particulars of income.
19. Regarding the other three assessment years, we are satisfied that the assessee's case is saved by the proviso to Explanation 1 to Section 271(l)(c) as it is a case of rejection of the assessee's explanation in part and acceptance of the same in part. We, therefore, agree with the reasoning and conclusion of the Commissioner (Appeals) cancelling the penalties in all the three years.
20. In the present case, we are called upon to decide whether Shri Palaniswamy, the individual is guilty of concealment of his income or furnishing of inaccurate particulars of such income, and, hence, liable to penalties under Section 271(1)(c) for these years. We are not concerned in the present appeals with the question whether the HUF of the assessee would be liable to any penalty under Section 271(l)(c). On the facts discussed above, we are satisfied that the Commissioner (Appeals) has reached at the correct conclusion that the assessee, the individual, is not liable to any penalty under Section 271(l)(c) and that he has discharged his burden of proof under the Explanation to Section 271(1)(c) in the first two years and under the proviso to Explanation 1 to Section 271(1)(c) in the remaining three years. We, therefore, confirm his orders in all the years.
21. In view of the above discussion, we do not consider it necessary to examine and decide the alternative submissions made by Shri Ramagopal, the learned counsel for the assessee.