# M/s Nainu Mal Hot Chand, Kanpur v. Comissioner of Income tax, Kanpur

- **Citation:** (2007) 1 ILRA 258
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2006-10-30
- **Case number:** Income Tax Reference No.73 of 1993
- **Bench:** R.K. Agrawal, Vikram Nath
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-nainu-mal-hot-chand-kanpur-v-comissioner-of-income-tax-kanpur-40855
- **Pages:** 9

## Headnote

Income Tax Act, 161, Section 271 (c)-
Imposition of penalty applicant-assessed
income tax during assessment year
1989-90-assessee
concealed
the
particulars of income of Rs.1,65,000/-
held-the satisfaction can be concluded
from assessment order itself-penalty
proceeding rightly initiated.

Held: Para 20

So far as the two decisions of the Delhi
High Court are concerned, we find that
under the provisions of the Act, the
Income Tax Officer is not required to
record his satisfaction in a particular
manner or reduce it in writing. It can be
gathered from the assessment order
itself. In D.M. Mansavi (supra) the Apex
Court has clearly held that the Income
Tax Officer should be satisfied during the
course of the assessment proceeding
that the assessee had concealed his
particulars of income or has furnished
inaccurate particulars of such income.
The satisfaction can be gathered from
the assessment order. In the present
case, we find that the Income Tax Officer
had material before him for being
satisfied
that
the
applicant
has
concealed the particulars of his income
and, therefore, penalty proceeding have
rightly been initiated. We are, therefore,
with great respect unable to persuade
ourselves to follow the view taken by the
Delhi High Court in the aforesaid two
cases.
Case law discussed:
(1991) 189 I.T.R. 41 (Bom)
(1994) 210 ITR 103 (Cal.)
(1999) 235 ITR-461 (G)
(2000)164 CTR 209 (Guj)
(2000) 246 ITR-568 (Delhi)
(2000) 246 ITR-571
(2003) 263 ITR-484 (P & H)
(1972) 86 ITR-557
1 All] M/s Nainu Mal Hot Chand, Kanpur V. Comissioner of Income tax, Kanpur
259

## Text

258 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
principles of natural justice are not
attracted and the appointment of the
petitioner itself stand vitiated under law.
The above argument is devoid of any
substance in as much as the impugned
termination order has otherwise been
found to be invalid without going into the
question of it having been passed in
violation of the principles of natural
justice. Moreover, the respondents have
not chosen to cancel the appointment of
the petitioner on the alleged ground of
misrepresentation or concealment of fact
which may have possibly be done without
affording any opportunity of hearing to
the petitioner.

10. In view of the above discussion,
the impugned termination order dated
26th April 1989 (Annexure 3 to the writ
petition)
is
quashed.
However,
the
respondents are at liberty to pass a fresh
order if they so desire in accordance with
law.

The writ petition is allowed. No
order as to costs.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 30.10.2006

BEFORE
THE HON'BLE R.K. AGRAWAL, J.
THE HON'BLE VIKRAM NATH, J.

Income Tax Reference No.73 of 1993

M/s Nainu Mal Het Chand, Kanpur

...Applicant
Versus
Commissioner of Income Tax, Kanpur

 ...Respondent

Counsel for the Applicant:
Sri K.N. Kumar

Counsel for the Respondent:
Sri A.N. Mahajan
S.C.

Income Tax Act, 161, Section 271 (c)-
Imposition of penalty applicant-assessed
income tax during assessment year
1989-90-assessee
concealed
the
particulars of income of Rs.1,65,000/-
held-the satisfaction can be concluded
from assessment order itself-penalty
proceeding rightly initiated.

Held: Para 20

So far as the two decisions of the Delhi
High Court are concerned, we find that
under the provisions of the Act, the
Income Tax Officer is not required to
record his satisfaction in a particular
manner or reduce it in writing. It can be
gathered from the assessment order
itself. In D.M. Mansavi (supra) the Apex
Court has clearly held that the Income
Tax Officer should be satisfied during the
course of the assessment proceeding
that the assessee had concealed his
particulars of income or has furnished
inaccurate particulars of such income.
The satisfaction can be gathered from
the assessment order. In the present
case, we find that the Income Tax Officer
had material before him for being
satisfied
that
the
applicant
has
concealed the particulars of his income
and, therefore, penalty proceeding have
rightly been initiated. We are, therefore,
with great respect unable to persuade
ourselves to follow the view taken by the
Delhi High Court in the aforesaid two
cases.
Case law discussed:
(1991) 189 I.T.R. 41 (Bom)
(1994) 210 ITR 103 (Cal.)
(1999) 235 ITR-461 (G)
(2000)164 CTR 209 (Guj)
(2000) 246 ITR-568 (Delhi)
(2000) 246 ITR-571
(2003) 263 ITR-484 (P & H)
(1972) 86 ITR-557
1 All] M/s Nainu Mal Hot Chand, Kanpur V. Comissioner of Income tax, Kanpur
259
(Delivered by Hon'ble R.K. Agrawal, J.)

1. The Income Tax Appellate
Tribunal, Allahabad has referred the
following question of law under Section
256(1) of the Income Tax Act, 1961
(hereinafter referred to as "the Act") for
opinion to this Court:-

"Whether on the facts and in the
circumstances of the case, the Tribunal
was justified in confirming the penalty
under
Section
271(1)(c)
read
with
Explanation 1 thereto?"

2. The reference relates to the
Assessment Year 1989-90 in respect of
the
penalty
imposed
under
Section
271(1)(c) of the Act.

3. Briefly stated, the facts giving rise
to the present reference are as follow:-

The applicant has been assessed to
income tax during the assessment year
1989-90 as a registered firm. During the
course of the assessment proceeding,
three cash credit entries of Rs.26,000/-
appearing in the name of Master Manish
Matlani, Rs.78,000/- appearing in the
name of Master Hitesh Matlani and
Rs.61,000/- appearing in the name of
Master Lucky Matlani were noticed by
the Assessing Authority. He proposed
addition of the aforesaid amount under
Section 68 of the Act. The applicant gave
the
explanation
that
all
the
three
depositors who were minors, have been
regularly assessed to tax with the Income
Tax Officer, Ward II (VII), Kanpur and
were maintaining savings bank account
with the Indian Overseas Bank, Swarup
Nagar Branch, Kanpur. The applicability
of the provisions of Section 68 of the Act
was also challenged on the ground that
the income had already been assessed in
the hand of the minors and that the
deposits have come from their savings
bank account through cheques. The
genuineness of the cash credit as well as
the capacity to give money/loan stands
established. The Assessing Authority after
examining
the
explanation
and
the
documents filed by the applicant in the
assessment proceeding, came to the
conclusion that all the three minors are
grand sons of Sri Nainu Mal Matlani who
is a partner of the firm and are closely
related to the partners. The father of
Master Manish Matlani, Sri Ram Chandra
Matlani is working as Manager on a
salary of Rs.1,500/- p.m. in M/s Naini
Mal & Sons, which is a sister concern of
the applicant whereas Sri Om Prakash
Matlani, father of Master Hitesh Matlani
and Sri Kanhaiya Lal Matlani, father of
Master Lucky Matlani, are working in the
applicant firm on a monthly salary of
Rs.1,500/-. He further found that Master
Lucky Matlani had a credit balance of
Rs.27,000/- in the applicant firm. He had
made a deposit of Rs.2,000/- on 2.4.1988,
Rs.58,000/- on 21.6.1988 and Rs.1,000/-
on 1.7.1988 and the entire amount was
squared up on 28.7.1988. The source of
deposit of Rs.61,000/- made during the
year was explained as gifts received by
the minor on various occasions. However,
no proof regarding receipt of gifts was
furnished. The only explanation offered
was that the minor had shown the gift as
his income in his return filed for the
assessment years 1986-87, 1987-88 and
1988-89. Sri Kanhaiya Lal, father of
Master
Lucky
Matlani,
who
was
examined under Section 131 of the Act,
had deposed in his statement that in the
return of income of Master Lucky Matlani
filed for the assessment year 1988-89,
Rs.87,800/- was shown as cash in hand
260 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
which was deposited in the savings bank
account maintained with the Indian
Overseas Bank, Swarup Nagar Branch,
Kanpur from where Rs.58,000/- was
withdrawn
and
deposited
with
the
applicant firm. On being questioned to
explain the source of the income of the
minor declared in the income tax return,
Sri Kanhaiya Lal had stated that the gifts
were the source of the income for which
he had no proof and every year the source
of income remained the same, i.e., the
gifts. On being further questioned as to
how the gifts received in each year were
not deposited in the bank account
immediately or soon thereafter they were
received, Sri Kanhaiya Lal had no
explanation to offer. The Income Tax
Officer examined the savings bank
account pass book of Master Lucky
Matlani and found that the amount of
Rs.87,800/- was deposited in cash on
21.6.1988 and on the same day, the
money was deposited with the firm. He
came to the conclusion that it is nothing
but unaccounted profit of the firm which
has come to it in the garb of gifts and
subsequently as deposits in the name of
the minors. So far as the deposit made by
Master Manish Matlani is concerned, his
account with the applicant firm showed
opening credit balance of Rs.8,000/- and
further credit of Rs.25,000/- on 21.6.1988
and Rs.1,000/- on 1.7.1988 and the entire
amount was squared up on 1.10.1988. The
explanation furnished was the same as in
the case of Master Lucky Matlani. Sri
Ram Chandra Matlani, father of Master
Manish Matlani, was examined under
Section 131 of the Act and he gave the
similar explanation. The copy of the
savings bank account of Master Manish
Matlani was also examined by the Income
Tax Officer who found that Rs.25,000/-
was deposited on 21.6.1988 in the bank
which is the same date on which the
amount was credited by the applicant in
its books of account. He came to the
conclusion that the firm's profit had been
routed through minor's bank account. In
respect of the deposits appearing in the
name of Master Hitesh Matlani, the
position was no different. The Assessing
Authority added a sum of Rs.1,65,000/-
towards unexplained cash credit under
Section 68 of the Act. The additions have
been upheld upto the stage of the
Tribunal. The Income Tax Officer while
passing
the
assessment
order,
also
directed
for
initiation
of
penalty
proceeding under Section 271(1)(c) of the
Act for concealment of particulars of its
income. After considering the explanation
given by the applicant, he imposed a sum
of Rs.86,950/- as penalty. The appeal
preferred by the applicant has been
rejected by the Commissioner of Income
Tax (Appeals), Kanpur, which order has
been affirmed by the Tribunal.

4. We have heard Sri K.N. Kumar,
learned counsel for the applicant, and Sri
A.N. Mahajan, learned Standing Counsel
appearing for the Revenue.

5. The learned counsel for the
applicant submitted that before initiating
penalty
proceedings
under
Section
271(1)(c) of the Act, the Income Tax
Officer had not recorded his satisfaction
and,
therefore,
the
entire
penalty
proceeding stands vitiated. He further
submitted that minor depositors had three
independent source of income and the
money credited in the books of account of
the applicant really belonged to them.
They were income tax payees and had
been assessed to income tax on such
income whereunder the amounts received
by them as gifts have been treated to be
1 All] M/s Nainu Mal Hot Chand, Kanpur V. Comissioner of Income tax, Kanpur
261
their income and merely because in the
quantum proceeding the amount had been
added under Section 68 of the Act at the
hands of the applicant, the explanation
given by the applicant cannot be treated to
be false or unsubstantiated. Thus, no
penalty under Section 271(1)(c) of the Act
could have been imposed. He further
submitted that the onus of proving the
source of these deposits have been
discharged. In support of his aforesaid
plea, he has relied upon the following
decisions:-

(i) Commissioner of Income Tax v.
Dajibhai Banjibhai, (1991) 189 ITR 41
(Bom);
(ii) Commissioner of Income Tax v.
Eastern
Commercial
Enterprises,
(1994) 210 ITR 103 (Cal);
(iii) Roop Chandra & Manoj Kumar v.
Commissioner of Income Tax, (1999)
235 ITR 461 (Gau);
(iv) National Textiles v. Commissioner
of Income Tax, (2000) 164 CTR 209
(Guj);
(v) Commissioner of Income Tax v.
Ram Commercial Enterprises Ltd.,
(2000) 246 ITR 568 (Delhi);
(vi) Diwan
Enterprises
v.
Commissioner of Income Tax, (2000)
246 ITR 571 (Delhi); and
(vii) Commissioner of Income Tax v.
Munish Iron Store, (2003) 263 ITR 484
(P&H).

6. On the other hand, Sri A.N.
Mahajan,
learned
Standing
Counsel,
submitted that the deposits made by the
three minors with the applicant have been
upheld upto the stage of the Tribunal to be
not genuine deposits and have been added
as unexplained cash credit under Section
68 of the Act. The explanation offered by
the applicant had been disbelieved by all
the authorities. According to him, in the
assessment order itself the Assessing
Authority had mentioned for initiating
penalty
proceeding
under
Section
271(1)(c) of the Act for concealment of
particulars
of
income
which
itself
establishes that the Income Tax Officer
was satisfied that in the present case
penalty proceeding for concealment of
particulars of income has to be initiated.
According to him, no particular form of
recording satisfaction has been mentioned
under the Act and, therefore, recording of
the fact to initiate penalty proceeding
during the course of the assessment
proceeding would itself mean that the
Assessing Authority was satisfied that the
applicant had concealed the particulars of
his income and penalty proceedings have
to be initiated. He further submitted that
the explanation offered by the applicant
had rightly been disbelieved by all the
authorities including the Tribunal on valid
and cogent reasons. He submitted that
Explanation 1 to Section 271(1)(c) of the
Act clearly applies in the present case as
the explanation offered by the applicant
has been found to be false by all the
authorities. Thus, the penalty has rightly
been imposed. He has relied upon a
decision of the Apex Court in the case of
D.M. Manasvi v. Commissioner of
Income Tax, Gurjarat - II, Ahmedabad,
(1972) 86 ITR 557.

7. We have given our anxious
consideration to the various pleas raised
by the learned counsel for the parties.

8. It is not in dispute that the
deposits of Rs.1,65,000/- appearing in the
name of three minors have been added as
unexplained cash credit under Section 68
of the Act. The explanation given by the
applicant has been found to be false by all
262 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
the authorities including the Tribunal. In
the
penalty
proceeding,
similar
explanation was given, which had been
disbelieved and penalty of Rs.86,950/-
under Section 271(1)(c) of the Act has
been imposed. The Tribunal while dealing
with the explanation has recorded a
finding of fact that the applicant has not
been able to substantiate the explanation
to the effect that the depositors have
received gifts in any of the previous years
or had any independent source of income;
the applicant has not been able to prove
that this explanation was bona fide; there
was no documentary evidence in support
of the assessee's contention; even the
name of the person from whom the
alleged gifts were received, were not
disclosed to the Department; the minor
depositors were intimately related to the
partners
of
the
assessee
firm; the
explanation
was
baseless
and
the
provision of Section 271(1)(c) of the Act
were attracted in the present case.

9. The learned counsel for the
applicant had not been able to show that
the conclusions arrived at by the Tribunal
suffer from any legal infirmity. It is based
on appreciation of evidence and material
on
record.
The
Tribunal
has
not
committed any illegality while recording
the aforesaid findings and the conclusions
it drew.

10. So far as the question of
recording the satisfaction by the Income
Tax Officer is concerned, we find that the
Apex Court in the case of D.M. Mansavi
(supra) has held that merely because
notices for imposition of penalty were
issued subsequent to making of the
assessment order, would not show that
there was no satisfaction of the Income
Tax
Officer
during
the
assessment
proceeding
that
the
assessee
had
concealed the particulars of his income or
has furnished incorrect particulars of such
income. In paragraph 8 of the report, the
Apex Court has held as follows:-

"The fact that notices were issued
subsequent
to
the
making
of
the
assessment orders would not, in our
opinion,
show
that
there
was
no
satisfaction of the Income-tax Officer
during the assessment proceedings that
the assessee had concealed the particulars
of his income or had furnished incorrect
particulars of such income. What is
contemplated by clause (1) of section 271
is that the Income-tax Officer or the
Appellate Assistant Commissioner should
have been satisfied in the course of
proceedings under the Act regarding
matters mentioned in the clauses of that
sub-section. It is not, however, essential
that notice to the person proceeded
against should have also been issued
during the course of the assessment
proceedings. Satisfaction in the very
nature of things precedes the issue of
notice and it would not be correct to
equate the satisfaction of the Income-tax
Officer
or
Appellate
Assistant
Commissioner with the actual issue of
notice.
The
issue
of
notice
is
a
consequence of the satisfaction of the
Income-tax Officer or the Appellate
Assistant Commissioner and it would, in
our opinion, be sufficient compliance with
the provisions of the statute if the Incometax Officer or the Appellate Assistant
Commissioner is satisfied about the
matters referred to in clauses (a) to (c) of
sub-section (1) of section 271 during the
course of proceedings under the Act even
though notice to the person proceeded
against in pursuance of that satisfaction is
issued subsequently. We may in this
1 All] M/s Nainu Mal Hot Chand, Kanpur V. Comissioner of Income tax, Kanpur
263
context refer to a decision of five judges
Bench of this court in the case of
Commissioner of Income-tax v. S. V.
Angidi Chettiar [(1962) 44 ITR 739]
Shah J., speaking for the court, while
dealing with section 28 of the Indian
Income-tax Act, 1922, observed:

"The power to impose penalty under
section 28 depends upon the satisfaction
of the Income-tax Officer in the course of
proceedings under the Act; it cannot be
exercised if he is not satisfied about the
existence of conditions specified in clause
(a), (b) or (c) before the proceedings are
concluded. The proceeding to levy
penalty
has,
however,
not
to
be
commenced by the Income-tax Officer
before the completion of the assessment
proceedings by the Income-tax Officer.
Satisfaction before conclusion of the
proceeding under the Act, and not the
issue of a notice or initiation of any step
for imposing penalty is a condition for the
exercise of the jurisdiction."

11. In the case of Dajibhai
Kanjibhai (supra) one of the questions up
for consideration before the Bombay High
Court was as to whether the finding of the
Tribunal that the primary ingredient for
initiating penalty proceedings was absent
in the case as the Income-tax Officer did
not record his satisfaction during the
course of the assessment proceedings is
correct in law? In the last paragraph of the
assessment order, the Income Tax Officer
has stated as follows:-

"Assessed under section 144 of the
Act. Issue notice of demand. Issue notice
under sections 271(1)(a), 273(b) and
271(l)(b) of the Act Charge interest under
section 217. Give concession in tax as per
Taxation Concessions Order, 1964."
12. Though Section 271(1)(c) of the
Act was not mentioned as one of the
sections in respect of which the Income
Tax Officer was satisfied, the Inspecting
Assistant Commissioner to whom the
reference was made, imposed penalty of
Rs.3,00,000/- under Section 271(1)(c) of
the Act. In the light of the aforesaid facts,
the Bombay High Court has held as
follows:-

".......the legal position in this regard
is now well settled. In view of the
Supreme Court's decision in CIT v. S. V.
Angidi Chettiar [1962] 44 ITR 739,
power to impose penalty under section 28
of the old Act corresponding to section
271 of the new Act depends upon the
satisfaction of the Income-tax Officer in
the course of the proceedings under the
Act. It cannot be exercised if he is not
satisfied and has not recorded his
satisfaction about the existence of the
conditions specified in clauses (a), (b) and
(c) before the proceedings are concluded.
There is no evidence on record to show
that the Income-tax Officer, in this case,
was satisfied in the course of the
assessment proceedings. Therefore, we
must hold that the penal provisions of
section 271(1)(c) were not attracted in this
case."

13. The aforesaid decision is clearly
distinguishable for the reason that in the
present case during the course of the
assessment proceeding the Income Tax
Officer has mentioned for initiating
penalty
proceeding
under
Section
271(1)(c) of the Act for concealment of
the particulars of income.

14. In the case of Eastern
Commercial Enterprises (supra) the
Calcutta High Court has held that it is trite
264 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
law that cross-examination is the sine qua
non of due process of taking evidence and
no adverse inference can be drawn against
a party unless the party is put on notice of
the case made out against him and he
must be supplied the contents of all such
evidence, both oral and documentary, so
that he can prepare to meet the case
against
him which necessarily also
postulates that he should cross-examine
the witness hostile to him. In the present
case, we find that all the witnesses
examined under Section 131 of the Act
were fathers of the minor depositors and
were closely related with the applicant. In
any event, the applicant had not raised
any grievance nor had made any request
for cross examination. The aforesaid
decision is, therefore, of no help to the
applicant.

15. In the case of Roop Chandra &
Manoj Kumar (supra) the Gauhati High
Court has held where the gift amount does
not run into four or five figures, generally
no record or list is maintained and this is
not a case of receipt of gifts on one
occasion, like marriage, etc. and were
purportedly
received
on
various
occasions, each year and for 12-14 years,
the creditworthiness in respect of a sum of
Rs.9,000 each by the two creditors stands
established. The facts of the present case
are entirely different. Here the gifts run
into five figures. The list of the donors
have
not
been
produced
nor
any
explanation had been given. Even the
recipients of the gifts, i.e., the three
minors had voluntarily disclosed the same
as their income. The amount which had
been advanced, was deposited in cash on
the same day with the bank and later
given as loan by cheques. The authorities
have disbelieved the explanation and,
therefore, the credit worthiness of the
depositors stands disproved.

16. In the case of National Textiles
(supra) the Gujarat High Court has held
that the Explanation is to the effect that
where in respect of any fact or material
for purposes of his assessment, an
assessee offers an explanation which is
found by the Assessing Officer or the
Deputy Commissioner of Income Tax
(Appeals) to be false or where the
assessee is unable to substantiate his
explanation, then the amount added to his
income shall be deemed to represent his
concealed income; the newly introduced
Explanation 1 considerably reduces, but
does
not
altogether
remove
the
Department's onus to prove concealment
in assessed income based on unexplained
cash credit or unexplained investment and
like; in order to justify the levy of penalty,
two factors must co-exist, (i) there must
be
some
material
or
circumstances
leading to the reasonable conclusion that
the amount does represent the assessee's
income; it is not enough for the purpose
of penalty that the amount has been
assessed
as
income,
and
(ii)
the
circumstances must show that there was
animus, i.e., conscious concealment or no
act of furnishing of inaccurate particulars
on
the
part
of
the
assessee;
the
Explanation has bearing on factor no.1
but it has bearing only on factor no.2; the
Explanation
does
not
make
the
assessment order conclusive evidence that
the amount assessed was in fact the
income of the assessee; no penalty can be
imposed if the facts and circumstances are
equally consistent with the hypothesis that
the amount does not represent concealed
income as with the hypothesis that it does;
if a assessee gives an explanation which is
unproved but not disproved, i.e., it is not
1 All] M/s Nainu Mal Hot Chand, Kanpur V. Comissioner of Income tax, Kanpur
265
accepted but circumstances do not lead to
the reasonable and positive inference that
the
assessee's
case
is
false,
the
Explanation cannot help the Department
because there will be no material to show
that the amount in question was the
income of the assessee; alternatively,
treating the Explanation as dealing with
both the ingredients (i) and (ii) above,
where the circumstances do not lead to
the reasonable and positive inference that
the assessee's explanation is false, the
assessee must be held to have proved that
there was no mens rea or guilty mind on
his part; even in this view of the matter,
the Explanation alone cannot justify levy
of
penalty
and
absence
of
proof
acceptable to the Department cannot be
equated with fraud or wilful default.

17. In the case of Ram Commercial
Enterprises Ltd. (supra) the Delhi High
Court has held that a bare reading of the
provisions of section 271 and the law laid
down by the Supreme Court makes it
clear that it is the assessing authority
which has to form its own opinion and
record its satisfaction before initiating the
penalty proceedings; merely because the
penalty proceedings have been initiated, it
cannot be assumed that such a satisfaction
was arrived at in the absence of the same
being spelt out by the order of the
assessing authority; even at the risk of
repetition we would like to state that the
assessment order does not record the
satisfaction as warranted by section 271
for initiating the penalty proceedings. The
aforesaid decision has been followed
subsequently by the Delhi High Court in
the case of Diwan Enterprises (supra).

18. In the case of Munish Iron
Store (supra) the Punjab and Haryana
High Court has approved the order of the
Tribunal wherein the Tribunal has given
the following reasoning for cancelling the
penalty imposed under Section 271(1)(c)
of the Act:-

"It is clear from the above that not a
word has been written about concealment
of income. The Assessing Officer quietly
accepted the revised return and the
income disclosed therein. He did not
record how and why the revised return
was submitted. The statement of the
partner on pages 14-16 of the paper book,
Shri Ramesh Kumar was recorded and in
that statement, he did explain the reasons
which led to filing of the revised return.
Learned
counsel
for
the
assessee
contended
that
those
reasons
were
impliedly accepted by the Assessing
Officer. Looking at the assessment order,
one cannot challenge the above assertion
of learned counsel for the assessee. At any
rate,
the
satisfaction
above
the
concealment of income of furnishing of
inaccurate
particulars
of income to
assume jurisdiction to initiate and levy
penalty is clearly not recorded as enjoined
by law. The above jurisdictional defect in
our view cannot be cured. Accordingly,
we hold that penalty imposed is not valid
and jurisdiction to impose the same was
illegally assumed without recording a
proper satisfaction. Penalty imposed is
cancelled for the above reasons."

19. The aforesaid decisions is of no
help to the applicant inasmuch as in the
present case we find that in the
assessment order the Assessing Authority
had recorded a clear finding that the
profits of the firm had been diverted
through the deposits in question and a
case of concealment has been made out.
266 INDIAN LAW REPORTS ALLAHABAD SERIES [2007
20. So far as the two decisions of the
Delhi High Court are concerned, we find
that under the provisions of the Act, the
Income Tax Officer is not required to
record his satisfaction in a particular
manner or reduce it in writing. It can be
gathered from the assessment order itself.
In D.M. Mansavi (supra) the Apex Court
has clearly held that the Income Tax
Officer should be satisfied during the
course of the assessment proceeding that
the assessee had concealed his particulars
of income or has furnished inaccurate
particulars
of
such
income.
The
satisfaction can be gathered from the
assessment order. In the present case, we
find that the Income Tax Officer had
material before him for being satisfied
that the applicant has concealed the
particulars of his income and, therefore,
penalty proceeding have rightly been
initiated. We are, therefore, with great
respect unable to persuade ourselves to
follow the view taken by the Delhi High
Court in the aforesaid two cases.

21. In view of the foregoing
discussions, we answer the question
referred to us in the affirmative, i.e., in
favour of the Revenue and against the
assessee. There shall be no order as to
costs.
---------
REVISIONAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 17.11.2006

BEFORE
THE HON'BLE VINOD PRASAD, J.

Criminal Revision No. 4674 of 2006

Km. Mona and others ...Revisionists
Versus
State of UP and another ...Respondents

Counsel for the Revisionists:
Sri Rahul Chaturvedi

Counsel for the Opposite Parties:
A.G.A.
Sri K.K. Nirkhi

Code of Criminal Procedure-Section 319Power of Trail Court-an extra ordinary
one-to be exercised ex-debito justiceonly when reasonable possibility of
conviction-un married handicapped girl
suffering
deformity
in
her
leg-no
possibility of her involvements-should
not be harassed merely because of the
relative of husband of the deceasedconsequential directions issued.

Held: Para 10 & 11

Power under section 319 Cr.P.C. is an
extraordinary power given to the court
to be exercised ex- debito justice. It
should be exercised sparingly only when
it is required most. Summoning any body
as an accused at the stage of trial after
the evidence had started in the case
should be resorted to only when there is
reasonable possibility of his conviction.
Asking some body to fact the ordeal of
trial only to be acquitted is not the law
but is his harassment.

On the facts of the present case I find
that revisionist no.1 is an unmarried girl
who is handicapped and has deformity in
her leg. Her involvement in the offence is
a remote possibility. So far as two other
revisionists are concerned they are a
married couple resident of different
places. Merely because they are relatives
of the husband they should not be
harassed without any specific allegation
against them. They have got two infant
daughters and it very unlikely that they
will indulge in the demand of dowry and
torture. There is no specific allegation
against them and their names are
mentioned as a matter of course in the
statements, which in my view was not
sufficient to anoint any charge on them.