I . T . AS. NOS. 1918/ KB OF 1983-84 AND 702/ KB OF 1984-85, DECIDED ON 7TH OCTOBER, 1985. Versus I . T . AS. NOS. 1918/ KB OF 1983-84 AND 702/ KB OF 1984-85, DECIDED ON 7TH OCTOBER, 1985.

ORDER

The appellant, an individual, filed his return for assessment year 1981‑82 under section 59 (1) of the Income‑tax Ordinance, 1979 ( hereinafter referred to as the Ordinance'), declaring his income at Rs.30,000. Since the declared income was 20% above the average income of last three years, it was accepted under Self‑Assessment Scheme of the year and the assessment was framed accordingly on 15th November, 1981. It appears from perusal of record that on 20th December, 1981 the Income‑tax Officer received a letter from Circle‑II (Survey and Connection) Karachi whereby he was informed that the appellant had purchased three plots in Scheme No.17 Lyari, for a total consideration of Rs 2,68.600. The Income‑tax Officer then made necessary enquiries from K. D. A. and the purchasing of three plots and payment of Rs.2,68,600 was confirmed by K.D.A. vide their letter, dated 29th December. 1981. The Income‑tax Officer addressed a letter to his Inspecting Assistant Commissioner seeking his guidance for course of action to be adopted under the facts and circumstances as disclosed by him in his letter. Let us mention here that he sought the guidance because he thought that after the completion of the assessment under Self‑Assessment Scheme, the appellant was enjoying immunity. The Inspecting Assistant Commissioner by his letter, dated 16th January, 1982 directed the Income‑tax Officer to re‑open the case under section 65 of the Ordinance. He also, on request of the Income‑tax Officer, empowered him under section 146 of the Ordinance to make search etc., of the premises of the appellant and the Income‑tax Officer on the same day searched the shop of the appellant and also recorded his statement. On 18th January, 1982, the notice under section 65 of the Ordinance was issued and subsequently the appellant filed his return on 28th January, 1982 showing the same income as he did earlier. The Income‑tax Officer also directed him to file his wealth return also along with statement of his bank account. On 10th February, 1982 the appellant filed his wealth statement showing his wealth as on 30th June, 1981 at Rs.5,37,600. In this he also disclosed a loan of Rs.4,00,000 borrowed equally from Abdul Majeed and Mst. Amtul Aziz. On 18th February, 1982 he filed his statement of his Bank Account and also produced certificates of Abdul Majeed and Asia Begum showing that each of them had advanced a loan of Rs.2,00,000 to him. The Income‑tax officer then enquired from the appellant as to how he changed the names of his lenders and at the same time wanted him to offer his explanation regarding transactions amounting to Rs.22,30,627. On receipt of his reply on 8th March, 1982, the Income‑tax Officer further made enquiries about Rs.3,21,310 and Rs.2,20,000 and the amount of Rs.11,500 shown as commission. The appellant vide his letter, dated 15th April, 1982 informed the Income‑tax Officer that Rs.3,21,310 and Rs.2,20,000 were received by him as money sent by Munshi Hassan Ali of Faisalabad and Ayyub Khan of Lahore for receiving payment at Karachi. About Rs.11,500 he informed the Income‑tax Officer that in earlier assessment years also he had been claiming income from commission and the same was allowed to him. On 31st October, 1982 the Income‑tax Officer informed him that both Hassan Ali and Ayyub Khan were not traceable at the given address. However, by his letter, dated 11th December, 1982 he informed the Income‑tax Officer that the name of Ayyub Khan was wrongly mentioned in race of Hafiz Ayyub Ismail. The correspondence went on for some time between the Income‑tax Officer and the assessee and ultimately he added Rs.4,00,000 to the already declared income of the appellant and framed assessment accordingly. The Income‑tax Officer was of the view that the story of the appellant that he had borrowed Rs.2,00.000 each from Abdul Mujeeb and Asia Begum was incorrect. He also did not accept the explanation of the appellant regarding bank deposits of Rs.22,30,000 he was of the view that total sales of the appellant were to the tune of Rs.22,30,627 as shown by the bank account and not Rs.6,00,000 as declared by the appellant in his return. According to him, Rs.4,00,000 was profit earned by the appellant from his suppressed sales. On appeal, the order of learned Commissioner of Income‑tax (Appeals) was confirmed. The appellant, however, still felt aggrieved and came up in second appeal. Originally these grounds of appeal were taken in Memorandum of Appeal filed before this Tribunal in which only the addition of Rs.4,00,000 was disputed along with the rejection of the declared version. However, subsequently, additional grounds of appeal were filed by Mr. Muhammad Naseem, learned counsel for the appellant, which according to the learned counsel were purely legal grounds emerging out of the record. We have heard both the learned counsel for the appellant and Mr. Muhammad Farid, the learned Departmental Representative at length.

2. After hearing both the learned counsel for the appellant and the learned Departmental Representative and after going through the record, we are of the view that additional grounds of appeal are purely legal grounds which, if upheld, could go to the very roots of the jurisdiction of the assessing officer. We, therefore, admit them on record.

3. Mr. Muhammad Naseem, learned counsel for the appellant has vehemently argued that since the original assessment was framed under self‑assessment scheme, it was immune under para.6 of the self assessment scheme contained in Circular No. 11, dated 6th August, 1981 and could not have been re‑opened under section 65 of the Ordinance. Mr. Muhammad Farid, the learned Departmental Representative, on the other hand, argued that it did not qualify for self‑assessment scheme because neither trading nor profit and loss accounts were filed which were conditions precedent for a return qualifying under self‑assessment scheme. With due respect to learned Departmental Representative we find no force in his submission because Mr. Muhammad Naseem, the learned counsel for the appellant invited our attention to the assessment order itself and argued that the plea raised by Mr. Muhammad Farid was not taken up even by the Income‑tax 1946 Appellate Tribunal Pakistan 797 Officer. The learned counsel for the appellant further submitted that the trading and profit and loss accounts were filed like earlier years on estimate basis as the appellant was not maintaining account books. we therefore reject the contention of learned departmental Representative taut, at the same time, we are also of the view that immunity provided by paragraph 6 of Circular No. 11 does not mean ,,hat it renders provisions of section 65 of the Ordinance arioso. If the return of the apt., Rant way accepted under self‑assessment scheme, it was made immune from the hazards of detailed scrutiny. Obviously the Central Board of Revenue cannot repeal or suspend the provisions of the Ordinance. This is why all the self‑assessment scheme, right from 1979‑80 have been specifically and specially dealing with the cases of concealment of income. For example, paragraph 6 of Assessment Scheme No. 79‑80 specifically laid down as under:‑‑

"Assessments completed under self‑assessment scheme will be re‑opened only if there is a prima facie case of concealment of income. Selection of such cases shall be made only with the approval of the Commissioner of Income‑tax. Cases in which tax fraud is established shall not only be subject to penalty equal to 2 times of the tax said to be evaded but also shall be prosecuted."

Para. VII of S‑If‑assessment Scheme 1980‑81 specifically lays down that the protection against detailed scrutiny would not 'be available to the cases in which positive evidence of concealment of income is in possession of the Department. This position is further reiterated by paragraph XI of the same scheme which reads as under:‑‑

"It may be impressed on the tax‑payers that the benefits envisaged by the Scheme shall not be available in cases where positive evidence for concealment comes into the possession of the Department through its internal or external sources."

Dealing with these cases where the declared income is higher by 20% in the assessment year 1980‑81 as compared to the highest assessed income of the three preceding years, the same paragraph lays down that such return shall be immune from detailed scrutiny. Similarly, paragraph 6 of the self‑assessment scheme for assessment year 1981‑82 spells out these non‑company and company cases which shall not be "selected" for detailed scrutiny Thus, in the case of the appellant if the declared income is 20% higher as compared with the highest assessed income of any three preceding years, it is immune from and is protected against hazards of the detailed scrutiny. In this assessment year para. 9 of the notice appended to the self‑assessment scheme deals with the concealment cases in the following words:‑‑

"Notwithstanding anything contained in the preceding paragraph, the cases where positive evidence of concealment exists or comes into the possession of the Department during the pendency of the assessment, such cases shall fall outside the purview of the assessment scheme as well as from immunity from scrutiny, irrespective of the quantum of income declared or certificate furnished by the Chartered Accountant "

In view of the discussion made above, it is clear that as far as the provisions of section 65 of the Ordinance are concerned, they remain in full force during all the three self‑assessment schemes mentioned) above which deal with two types of concealments, firstly, the concealment about which the evidence is available before the assessment is framed and secondly those cases of concealment where assessment has been completed and subsequently the evidence regarding concealment is I brought to the knowledge of Income‑tax Officer. As far as the first type of concealment cases were concerned they denuded the returns filed under self‑assessment scheme of the immunity if there was evidence of concealment. As far as the other type of concealment is concerned, the self‑assessment scheme of 1979‑80 dealt with the issue in very unmistakeable and unambiguous terms laying down the only condition of the prior approval of the Commissioner of Income‑tax before any action under section 65 of the Ordinance was initiated. However, subsection (2) of section 65 speaks of the approval of the Inspecting Assistant Commissioner, hence the condition of the prior approval of Commissioner of Income‑tax being in conflict with the provisions of subsection (2) of section 65 becomes meaningless. We would, however, turn to this aspect subsequently. Let us also mention at this juncture that Mr. Muhammad Naseem, the learned counsel for the appellant, during the course of his arguments also referred to a certain Circular of Central Board of Revenue whereby it was laid down that before action under section 65 of the Ordinance could be taken, the approval of Commissioner of Income‑tax or C.B.R. was to be obtained in cases of immunity. He promised to produce such circular but has not done so till today. We wonder whether such circular exists. If it does, it would again be in conflict with provisions of subsection (2) of section 65 of the Ordinance and obviously the provisions of the Ordinance would prevail upon it. Thus, the first submission of the learned counsel for the appellant is rejected.

4. The learned counsel for the appellant then argued that before a notice under section 65 is issued, the Income‑tax Officer should initiate the matter and then the Inspecting Assistant Commissioner should accord his approval. Referring to the letter of Income‑tax Officer dated 30th December, 1981 addressed to the Inspecting Assistant Commissioner and the reply of the Inspecting Assistant Commissioner dated 16th January, 1982, Mr. Naseem, the learned counsel for the appellant argued that it was the Inspecting Assistant Commissioner who directed the re‑opening of the case of the appellant under section 65, on his own initiative which was contrary to section 65 of the Ordinance. Mr. Farid the learned Departmental Representative, on the other hand, argue that by seeking guidance from his Inspecting Assistant Commissioner the Income‑tax Officer set the ball rolling and the Inspecting Assistant Commissioner, after taking cognisance of all the facts stated by the Income‑tax Officer in his letter dated 30th December, 1981, director the Income‑tax Officer to take resort to section 65 of the Ordinance: According to the learned Departmental Representative, this was sufficient compliance of subsection (2) of section 65 of the Income Tax Ordinance. We respectfully agree with the submission of learned Departmental Representative and find no force in the contention of Mr. Naseem From perusal of the letter from Income‑tax Officer dated 30th December. 1981, it appears that he was in doubt as to whether the cases to which immunity was available under self‑assessment scheme were protected by section 65 of the Income‑tax Ordinance. He, therefore, stated not only the fact that the case of the appellant was immune under self assessment scheme because the income declared by him was 20% above the average income of last three years, but, at the same time, he also apprised him of the new information which came in his possession regarding the investment of Rs.2,60,600 by the appellant in shape of purchasing of three plots. He also mentioned that in the wealth statement the wealth of the appellant ac on 30th June, 1978 stood at Rs.1,06,000. Then he referred to the assessed income of the appellant for last three years which was Rs.23,900 Rs.28,800 and Rs.30,000 in assessment years 1979‑80, 1980‑81 and 1981‑82 respectively. He communicated to his Inspecting Assistant Commissioner his own view that it was not possible for the appellant to invest such hedge money under the facts as stated by him. On this information the Inspecting Assistant Commissioner directed him to re‑open the case under section 65 of the Income‑tax Ordinance. The very fact that he sought the guidance of the Inspecting Assistant Commissioner means that he initiated the process. Similarly from the letter of Inspecting Assistant Commissioner it appears that he accorded the approval when he directed him to re‑open the assessment under section 65. He has used the word "directed" simply because the Income‑tax Officer had sought his advice. We do not think that the Inspecting Assistant Commissioner would be according approval by use of the word approval only. There can be many conceivable modes of according approval and under the facts and circumstances of this case it is one of them. Let us also mention here that the point as to whether the Income‑tax Officer had definite information in his possession when he initiated proceeding under section 65 was debated at length before us. But it would suffice to observe that the contents of the letters of Income‑tax Officer dated 30th December, 1981, as discussed above, reveal a prima facie evidence for his action. Moreover, since subsection (2) of section 65 of the Ordinance makes a definite information, or the previous approval of the Inspecting Assistant Commissioner as alternative to each other, the issue of definite information is reduced merely to an academic point for the simple reason that the prior approval of Inspecting Assistant Commissioner is very much there. We, therefore, refrain from the reproducing the case‑law cited by both the parties on this point. But before parting with this issue, let us mention that subsection (4) was substituted by Finance Ordinance of 1980 and at the relevant time stood as under:‑

"(4) Nothing contained in subsection (2) shall apply to any such case or clause of cases to which clause (c) of subsection (1) applies, as may be specified by the Central Board of Revenue."

5. Now when we refer to clause (e) of subsection (1) of section 65, it appears that the Income‑tax Officer, subject to provisions of subsections (2), (3) and (4), can issue a notice for additional assessment provided: "The total income of an assessee or the tax payable by him has been assessed or determined under subsection (1) of section 59 and no order of assessment has subsequently been made under this section, or any other provision of this Ordinance." In other words, the Income‑tax Officer cannot issue notice for additional assessment if an order of assessment has subsequently been made either under section 65, or any other‑‑vision of the Ordinance. But, in the case before us though the assessment was framed on 15th November, 1981 no additional assessment was framed under section 65 or any other provision of this Ordinance. Thus, the provisions of subsection (2) of section 65 of the Ordinance remained applicable. Let us mention before parting with the issue, that the relevant provision of law laid down the rule that no tax‑payer would be taxed twice.

6. Now turning to the next submission of Mr. Naseem it appears that he has attacked the notice issued under section 65 of the Ordinance on three grounds: Firstly, his argument was that the notice is illegal inasmuch as the Income‑tax Officer had no definite information with him. According to him the Income‑tax Officer resorted to what is commonly known as "fishing" when he raided the shop of the appellant and recorded his statement. The learned counsel argued that the notice issued after this type of fishing was bad in law. In this connection he placed reliance on (1957) 32‑ITR‑289 at page 302, and (1964) 64 ITR 516. We have already dealt with this issue so it should not detain us any more. The second objection of Mr. Naseem is that it did not reveal any ground hence it was illegal. In support of this contention he cited 1966 P T D (Trib.)

80. He also produced the copy of the notice. We have gone through it and we find that ground No. (a) of the notice has been scored out leaving ground Nos. (b), (c) and (d) untouched, which are to the effect that the income of the Appellant had been assessable to Income‑tax for the year ending on 30th June, 1981, because it had:

(b) been under assessed, or

(c) been assessed at too low a rate,

(d) been subject of excessive relief.

It appears that the grounds mentioned in section 65 have been incorporated in the notice. The fact, that first ground has been scored out, shows that the Income‑tax Officer relied upon grounds (b), (c) and (d). Thus, this objection also appears to be devoid of any merit. The third defect point out in the notice by Mr. Naseem learned counsel for the appellant is that it was illegal inasmuch as it curtailed the prescribed period of 35 days to 7 days. In this connection he put his reliance on 1973 P T D 115 and 1985 P T D 282. Mr. Naseem also referred us to a circular No. 6 of 1973 dated 7th July, 1973, which is reproduced hereinbelow:‑‑

"Return of Income: (a) subsection (2) extension or reduction in period. The amendment in subsection (2) authorises an Income‑tax Officer to reduce or extend the period within which the return is required to be furnished. The requirement of a minimum period of 30 days has been dispensed with to enable the Income‑tax authorities to reduce or extend the period of filing of returns according to the circumstances of a case. The period should, however, be reduced only in cases of suspected tax fraud."

Mr. M. Farid, the learned Departmental Representative, on the contrary, has invited our attention to section 155 and argued that unless the appellant could show that substantial nature of prejudice had been caused to the appellant the curtailment of period of limitation amounts to only a defect of the notice and would not vitiate the assessment. Section 155 is as under:‑

"155. Certain mistakes not to vitiate assessment, etc. ‑‑ No assessment order, notice, warrant or other document made, issued or executed or purporting to be made, issued or executed under this Ordinance shall be void or otherwise inoperative merely for want of form, or for a mistake, defect or omission therein, if such want of form, or mistake, defect or omission, is not a substantial nature prejudicially affecting as assessee."

From its perusal it appears that no notice would be void or inoperative merely for want of form of for a mistake, defect or omission therein if such want of form or mistake, defect or omission is not of specific nature prejudicially affecting an assessee. From perusal of the record it appears that the notice was issued on 18th January, 1982 and the return was filed on 28th January, 1982 without any protest. Thus, we do not see that if period of 35 days would have been given to the appellant instead of 7 days, it could have made any difference in so, far as filing of the return was, concerned. It is important to note that notice under section 65 was issued to the appellant requiring him to file his "return in the prescribed form". We pointedly enquired from Mr. Naseem, the learned counsel, as to whether he could point out any prejudice much less the specific nature of prejudice to have been caused to the appellant and he could not point out any. We, therefore, find force in submission of learned Departmental Representative and overrule this objection of Mr. Muhammad Naseem as well. Thus, we find no force in all the grounds taken by learned counsel for the appellant in his additional memo. of appeal dated 6th June, 1985.

7. To sum tip we are of the view that under the facts and circumstances of the case the Income‑tax Officer initiated the proceedings under section 65 of the Income‑tax Ordinance, after receiving prima facie evidence of concealed income which was the result of under assessed, or assessed at too low a rate of the total income of the appellant. Moreover, Inspecting Assistant Commissioner accorded his approval when after taking recognizance of all the facts divulged to him by the Income‑tax Officer. He directed him to issue notice under section 65. We have also come to the conclusion that the notice issued by the Income‑tax Officer despite the defects pointed out by Mr. Naseem, the learned counsel for the appellant, was a valid and legal notice as the alleged defeats have not caused airy substantial nature of prejudice affecting the appellant. Let us once again repeat here that the Central Board of Revenue had no powers to override or repeal any provision of the Ordinance including these of section 155. Now we come. to the other aspects of the matter raised by the learned counsel for the appellant and propose to record our finding on the following two issues:

(1) Whether the appellant borrowed Rs.4,00,000 from the persons mentioned by him, and

(2) Whether Rs. 22, 317, 623 was the amount of total sales of the appellant during the relevant assessment year justifying the Income‑tax Officer to hold that Rs.4,00,000 was the amount of profit earned by the appellant.

8. Now taking up the first issue it appears from perusal of the record that the appellant on 17th January, 1982, in his sworn statement stated as under:‑‑

Again, on 10th February, 1982 the wealth statement was also filed showing the wealth of the appellant, as on 30th June, 1981, at Rs.5,37,600 including a loan obtained from aforesaid Abdul Majid and Ummatul Aziz. However, on 18th February, 1982, the appellant produced certificates from Abdul Mujeeb and Asia Begum to prove that each of them advanced a loan of Rs.200,000 to the appellant. Thereafter both Abdul Mujeeb and Asia Begum not only filed their affidavit but produced relevant extracts from village record to prove that they had means to advance the loan in dispute. The appellant, in reply to an inquiry made by the Income‑tax Officer, informed him by his letter dated 8th March, 1982 that while making statement on 17th January, 1982 the appellant was very much confused, and could not correctly mention the names of the persons who advanced loan in dispute to him. He reiterated that the loan was actually advanced by Mst. Asia Begum and Mr. Abdul Mujeeb. The Income‑tax Officer did not believe the explanation and took the subsequent version as an afterthought. His finding also found favour with the learned Commissioner of Income‑tax (Appeals). Mr. Naseem, the learned counsel for the appellant, however, has argued that in view of the sworn statement of aforesaid Asia Begum and Abdul Mujeeb which is well‑supported by documentary evidence) the Income‑tax Officer should not have rejected the explanation offered by the appellant. However, under the facts and circumstances of the case, we feel that the conclusion arrived at by the Income‑tax Officer, which has been upheld by the learned Commissioner of Income‑tax (Appeals), is based on correct and proper appreciation of the evidence on record. In his own statement recorded, on 17th January, 1982, the appellant has clearly admitted that in the month of December, 1980, he himself obtained the loan from Abdul Majeed and Amtul Aziz at their residence in shape of cash and in the presence of his family members lie has not only admitted the borrowing of money from both the persons mentioned above but has also mentioned the place, month and the mode in which the loan was received along with the witness of the transaction. His statement does neither reflect any confusion nor admit any ambiguity. Moreover, if there was any confusion at all therein on 10th of February, 1982 when he was filing his wealth statement under legal guidance, he should not have reiterated the names of Abdul Majeed and Mst. Amtul Aziz. We agree with the Income‑tax Officer that the subsequent change in the names is an afterthought. We have also no hesitation in observing that both Abdul Mujeeb and Asia Begum have entered into the arena to save he appellant from his tax liability being his cousins, namely the son and daughter of his mother's sister. It is important to note that in the affidavit of both Abdul Mujeeb and Mst. Asia Begum, it is mentioned that the loan was given for the period commencing from 15th December, 1980 and ending on 15th December, 1982. But it has not been alleged by the appellant at any stage that aforesaid loan has been paid back to both the persons. This also lends support to the conclusion of Income‑tax Officer who framed the assessment on 30th June, 1983, i.e. after the expiry of the period of loan. We, therefore, held that the appellant has failed to prove that Rs.4,00,000 was the loan money taken by him either from Abdul Majeed and Amtul Aziz as originally stated by him, or Abdul Mujeeb and Asia Begum as subsequently stated by him. Let us mention at this juncture that burden of providing a cash credit coming from alleged source rests squarely on the shoulders of an assessee which cannot be discharged merely by producing al certificate or an affidavit to that effect from third party. It is open to an Income‑tax Officer to look into the attending circumstances and then reject the explanation was unsatisfactory. We rely for this proposition on two decisions coming from no less an authority then the Indian Supreme Court as reported in (1958) 34 I T R 807 (S C) and (1959) 351 I T R 416 (SC).

9. Now finally turning to the second issue the Income‑tax Officer has answered aforesaid issue also in the affirmative and against the appellant for various contradictions and ever‑changing statement of the appellant. Firstly, he stated that his bank statement showed various cheques and drafts received and deposited by him for and on behalf of his friends so that they could get the money at Karachi. However, subsequently by his letter, dated 25th April, 1982, he stated that Munshi Hassan Ali and Ayyub Khan deposited money with him for making purchases on commission for them. On top of it, according to his own showing his sales were to the tune of Rs.13,25,508 whereas he declared the sales to the extent of Rs.6,00,000 only. It is also important to note that he has taken refuse in the changing of names by his letter dated 11th December, 1982. Ayyub Khan of Ram Gali No.2, Brandreth Road, Lahore is changed into Hafiz Ayyub Ismail of Lahore and Munshi Hassan, Ali is converted into Mr. Munshi, Proprietor of M/s. Ittehad Corporation Faisalabad. These Ayyub Khan and Munshi Hassan Ali change into Hafiz Ayub Ismail and Mr. Munish have also filed their affidavits to support the appellant. It is important to note that this change took place when Income‑tax Officer informed the appellant that Munshi Hassan Ali was not traceable at the address supplied by the appellant and that the summons under section 148 sent to Mr. Ayub Khan also returned un-served. In view of all this discussion the submission of Mr. Muhammad Naseem, the learned counsel for the appellant that the explanation offered by the appellant regarding the statement of bank account should have been believed by the Income‑tax Officer has no loss to stand upon, Before parting with this issue let us mention here that undoubtedly the appellant has been earning same income by way of commission and the finding of Income‑tax Officer as confirmed by learned Commissioner of Income‑tax (Appeals) is not correct. However, we do not think that it affects the conclusion of the Income‑tax Officer in any manner whatsoever. Even if the entire sales allegedly made to Munshi Hassan Ali or Ayub Khan are ignored, there remain still a lot of bank transactions unexplained out of which an income of Rs.4,00,000 appears to be probable. We, therefore, in any case, confirm the finding of Income‑tax Officer which was rightly upheld by the learned Commissioner of Income‑tax (Appeals).

10. At this stage we should also observe that the Income‑tax Officer, has taken pains in confronting the appellant with and seeking his explanation about, a fact which he wanted to rely upon against him. Mr. Naseem, the learned counsel for the appellant has, on the other y hand, alleged that the Income‑tax Officer has concealed so many facts in his assessment order. But, with due respect to the learned counsel for the appellant, we are not persuaded by his submissions to accept them he has produced before us a list of alleged concealed facts whit‑h he requested to be placed on file, arid we have granted his request. But in our view, all the facts mentioned by him, are wholly irrelevant in view of pointed finding of fact arrived at by Income‑tax Officer which is well‑supported by very cogent and convincing evidence on record. Let us also mention that a number of rulings were cited by Mr. Farid, the learned Departmental Representative also as well as by learned counsel for the appellant which we have not discussed in our order. We have done so for the sake of brevity but without sacrificing the interest of justice. They have been ignored when they have been found irrelevant or unnecessary.

11. This takes us to the other appeals which is regarding penalty. Mr. Naseem, the learned counsel for the appellant inviting our attention to (1970) 76 I T R 696 and 1973 P T D 124 argued that the order of learned Commissioner of Income‑tax (Appeals) was not sustainable for the onus rested heavily on the shoulders of the assessing officer to hold that the appellant had been guilty of deliberate concealment of income before he could impose any penalty. With due respect to learned counsel since the date the cases relied upon by him were decided hundreds of thousands of cusecs of water has flown down the River Ganges in India and River Sind in Pakistan, The controversy on the issue between High Courts of Bombay and Patna, on one hand and High Courts of Allahabad and Madras, on the other, was finally resolved by Indian Supreme Court in the following words:‑‑

"It must be remembered that the proceedings under section 28 are of 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 the tax is conclusive. However, it is good evidence. Before penalty can be imposed the entirety of the 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."

Please see (1970) 76 I T R 696 (SC).

In other case reported as (1972) 83 I T R 369, the Indian Supreme Court again stated the law on the subject in the following words:‑

"From the above it is clear the penalty proceedings being penal in nature, the department must establish that the receipt of the amount in dispute constitutes income of the amount in dispute constitutes income of the assessee. Apart from the falsity the department must have before it before levying penalty cogent material or evidence from which it could be inferred that the assessee has consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that the disputed amount is a revenue receipt. No doubt, the original assessment proceedings for computing the tax may be a good item of evidence in the penalty proceedings but the penalty cannot be levied solely on the basis of the reason; given in the original order of assessment."

12. Keeping these principles in mind when we go through the assessment as well as the impugned under and the evidence on record it appears to that the fact that the appellant alleged that took the loan of Rs.4,00,000 and then failed to prove it and the fact that the "admitted sales of Rs. 13, 25, 508 could not be proved satisfactorily has changed the complexion of his case altogether. Moreover, the omission of sword 'deliberate.' from section 111 of the Income‑tax Ordinance has also titled the scales against him. In our judgment it is not a case of mere inference from falsity of the explanation given by the assessee but the entirety of the evidence available on record and the attending', circumstances make the probabilities go against him in such a way that it could reasonably be held that the appellant had concealed the particulars of his income and furnished inaccurate particulars. As such we see no reason to interfere with the orders of both the officers below.

13. As far as the rate of penalty is concerned the Income‑tax Officer bas exercised his discretion and it does not appear to be whimsical or arbitrary exercise. Under the facts and circumstances of the case, we, therefore, are of the view that it calls for no interference from us.

14. In view of discussion made above, we find no force in both the appeals and they are rejected accordingly.

M. Y. H. Appeals rejected.