Law: Income Tax Act, 1922

Section: 28(1)(c)

Income-tax-Penalty-Merely giving false explanation of credit entry-Whether concealment-Imposition of penalty-Legality --Indian Income-tax Act, 1922, S. 28(1)(c). Proceedings under section 28(1)(c) are in the nature of penal proceedings and before imposing penalty under the section the revenue must establish that the assessee was guilty of concealment of particulars of income. Merely giving an explanation for a credit entry which is not believed by the Income-tax Officer does not amount to concealment of income and is no ground of imposing a penalty. Commissioner of Income-tax v. Gokuldas Harivallabhdas (1958) 34 I T R 98 and Commissioner of Income-tax v. Anwar Ali (1967) 65 I T R 95 fol. JUDGMENT BANERJEE, J.-This reference, under section 66(1) of the Indian Income-tax Act, 1922, has been made in the circumstances hereinafter related.      The statement of case relates to the assessment year 1951-52. The assessee is an individual having business in share dealings. He has also some income from property, dividends and other sources. The Income-tax Officer found that the assessee had purchased 3,000 shares of Rani Cherra Tea Co. Ltd. for Rs. 33,000 and 2,500 shares of Indian Iron & Steel Co. Ltd. for Rs. 48,281, the total value of investment being Rs. 81,281 ; but the investment in purchasing shares of Rani Cherra Tea Co. Ltd. for Rs. 33,000 was not entered in the books of the assessee. When the assessee was called upon to explain the source of the investment, he alleged that he had borrowed Rs. 80,940 from his wife. Called upon further to explain how his wife had amassed so much money in her hands, it was said that she received Rs. 32,000 from her father in 1940 and the balance constituted her savings from out of monthly payments of Rs. 500, made to her by tire assessee, for her personal expenses, during the last 10 years. The Income-tax Officer accepted the existence of savings to the extent of Rs. 38,000 and treated the balance of Rs. 53,000 as income from undisclosed sources. With the other parts of the assessment order we are not concerned in this reference. The assessee appealed before the Appellate Assistant Commissioner. The…