Commissioner of Income-tax Vs. Suchitra Sen - Court Judgment

Sudhindra Mohan Guha, J.

1. This reference under Section 256(2) of the I.T. Act, 1961, relates to the assessment year 1959-60, and the relevant accounting year is the financial year ended on March 31, 1959.

2. Before the assessment under Section 23(3) of the Indian I.T. Act, 1922, on December 27, 1960, the assessee filed 4 returns of income on September 7,1960, September 14, 1960, November 26, 1960, and December 21, 1960, revising the income from profession shown in the earlier return. In the last return filed on December 21, 1960, the assessee had shown professional income of Rs. 80,575 as her earning from the films, viz., Hospital, Bombaika-Babu and Saptapadi.

3. During the assessment proceedings the assessee agreed with the ITO that there was some mistake in the professional income shown by her. Finally, the assessee agreed that in the accounting year relevant to the assessment year under reference she received Rs. 95,500 in respect of her role in the different films.

4. The ITO, however, considering the investments made by the assessee in the purchase of house property, jewellery, cadillac car, etc., estimated the assessee's professional income at Rs. 3 lakhs and the net professional income of the assessee was determined at Rs. 2 lakhs.

5. Simultaneously, the ITO initiated penalty proceedings under Section 271(1)(c) of the I.T. Act, 1961, and referred the matter to the IAC.

6. Meanwhile, the assessee preferred an appeal before the AAC who accepted the professional income of the assessee at Rs. 95,500. After deducting Rs. 12,000 as expenditure the AAC finally determined the net professional income of the assessee at Rs. 83,500. As regards the various investments made by the assessee, the AAC estimated her income from undisclosed sources at Rs. 70,000.

7. Both the assessee and the revenue came in appeals before the Tribunal. The assessee objected to the decision of the AAC in estimating her income from other sources at Rs. 70,000. The revenue, on the other hand, challenged the finding of the AAC as to the professional income at Rs. 95,500.

8. On February 15, 1967, the IAC passed the order under Section 271(1)(c) of the Act whereby he imposed a penalty of Rs. 80,000 on the assessee. It may be mentioned that the IAC in his order had highlighted the fact that the assessee had not shown her professional income of Rs. 15,000 and Rs. 4,500 from the two films, viz., Indrani and Chawya Pawya, respectively, in any of the returns filed by her.

9. Being aggrieved by the order of the IAC, the assessee preferred an appeal to the Tribunal. Meanwhile, on April 16, 1970, the Tribunal passed an order in the appeals preferred by the assessee and the revenue against the order of the AAC wherein the Tribunal upheld the order of the AAC in respect of the assessee's professional income at Rs. 95,500, Moreover, the Tribunal-allowed expenses of Rs. 15,000 as against Rs. 12,000 allowed by the AAC. Again, the Tribunal estimated the assessee's income from other sources at Rs. 46,000 in place of Rs. 70,000 estimated by the AAC.

10. In its order dated April 12, 1971, against the penalty imposed under Section 271(1)(c) of the Act, the Tribunal held that with reference to the professional income as finally assessed there was no concealment. For reasons stated in the order under reference and relying on the decision of the Supreme Court in the case of CIT v. Anwar All : [1970]76ITR696(SC) , the Tribunal held that the provisions of Section 271(1)(c) of the Act were not attracted even in respect of Rs. 46,000 assessed as the assessee's income from undisclosed sources.

11. From and out of the aforesaid facts as directed by the High Court, the Tribunal referred the following questions for its consideration :

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that by not disclosing the receipts from Indrani and Chawya Paway in any of the four returns filed, the assessee did not conceal the particulars of her income or deliberately furnish inaccurate particulars of such income within the meaning of Section 271(1)(c) of the Income-Act, 1961 ?

(2) Whether the entirety of the circumstances of the case does not reasonably point to the conclusion of concealment or deliberate furnishing of the inaccurate particulars of income on the part of the assessee so as to attract the provisions of Section 271(1)(c) of the Income-tax Act, 1961 ?'

Under Section 271(1)(c) of the I.T. Act, 1961, it was to be seen whether the assessee had concealed the particulars of her income by furnishing inaccurate particulars of such income. Coming to the income of Rs. 46,000 taken as income from undisclosed sources, this was arrived at as receipts at Rs. 4,12,101 and outgoings at Rs. 4,27,814 by the I.T. authorities. The outgoings were in excess of the receipts by Rs. 15,713. The receipts, as it is shown, at Rs. 30,101 from A.D. Films was not proved. The total expenditure worked out to Rs. 45,814 or in rounded figure, Rs. 46,000, which was assessed as income from undisclosed sources.

12. According to the Tribunal, the receipts from A.D. Films of Rs. 30,101 was considered to be not proved. There was no evidence on the part of the department to show that the assessee had actually received such an amount as alleged by the department. The loan from Saroda Finance of Rs. 30,000, according to the Tribunal, is not income and the receipt of Rs. 50,000 from Charu Chitra was held by the Tribunal to be not taxable. It is found by the Tribunal that there was an excess of expenditure over the receipts. According to the Tribunal, there was no evidence which can be taken to have established that such expenditure was made out of any unaccounted receipts which was established to be an income of a revenue nature. It is also found by the Tribunal that there was no evidence to show that credits in the bank account (in excess of the quantum of professional receipts) considered in the assessment were income of a revenue nature. The only other item assessed is interest from bank taken by the ITO at Rs. 21 and by the AAC at Rs. 40. Having regard to the quantum of the amount and the fact that the bank account was always produced by the assessee, the Tribunal considered that there was no question of concealment in this regard.

13. Next the Tribunal referred to the decision of the Supreme Court in Anwar Ali's case : [1970]76ITR696(SC) . At page 701 of the report, their Lordships observed as follows (p. 701):

'Another point is whether a finding given in the assessment proceedings that a particular receipt is income after rejecting the explanation given by the assessee as false would, prima facie, be sufficient for establishing, in proceedings under Section 28, that the disputed amount was the assessee's income. It must be remembered that the proceedings under Section 28 are of a penal nature and the burden is on the department to prove that a particular amount is a revenue receipt. It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income. It cannot be said that the finding given |in the assessment proceedings for determining or computing to tax is conclusive. However, it is a good evidence. Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars.'

Thus, it is the specific finding of the Tribunal that it has not been established for the purpose of penalty that the amount in question, viz., the sum of Rs. 46,000 represented or emanated out of the receipts which were income of a revenue nature. Accordingly, the Tribunal held that the provisions of Section 271(1)(c) are not attracted.

14. We have given our anxious consideration to the facts found by the Tribunal. Having regard to the decision of the Supreme Court in Anwar Ali's case : [1970]76ITR696(SC) , we are of the opinion that the Tribunal was right in holding that the sum of Rs. 46,000, which was assessed as income from undisclosed sources, was not proved for the purpose of penalty as receipts which were income of a revenue nature. In this view of the matter, the Tribunal was perfectly justified in cancelling the order of penalty imposed upon the assessee. Thus, in the facts, as found by the Tribunal, we answer both the questions in the affirmative and in favour of the assessee.

15. There will be no order as to costs.

Sabyasachi Mukharji, J.

16. I agree.