TMI Blog1987 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. (i) For cane cost 48,500 48,500 (ii) For shortage in cane 67,500 (iii) For salary of outstation staff 21,700 The assessee did not challenge the said assessment order passed by the Income-tax Officer in regard to the additions of the above amounts in appeal or otherwise. It was the case of the assessee that it did not appeal because it wanted to keep good relations with the Revenue although, according to the assessee, the above additions made by the Income-tax Officer were totally unjustified and illegal. On March 14, 1963, the Income-tax Officer issued notice under section 274 read with section 271 of the Income-tax Act, 1961 (hereinafter called the Act ), in respect of the assessment year 1958-59 for imposing penalty. The assessee-company demurred. After considering the reply, the Inspecting Assistant Commissioner on October 1, 1964, imposed a penalty of ₹ 70,000 under section 274 read with section 271 of the Act holding, inter alia, that there was concealment of income to the tune of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no appeal by the Revenue. As regards the third question reframed as mentioned hereinbefore, it was answered by the High Court in the affirmative and in favour of the Revenue. The assessee has come up in appeal to this court challenging the correctness of that answer. In this appeal, we are concerned with the correctness or otherwise of the answer given to this question and the appeal must be confined to the correctness of the answer given to the third question as reframed. The Income-tax Officer, in his assessment order out of which this penalty proceeding arose, noted that there were several disallowances in various accounts and he mentioned altogether 19 items totalling ₹ 3,01,787. All these were on account of disallowances. Main item was shortage in cane and the amount was ₹ 67,500. Another item was salary of outstation staff and the amount was ₹ 21,700. There was also addition of ₹ 48,500 on account of inflation in the price of sugarcane. The Inspecting Assistant Commissioner in his order noted, inter alia, three items, namely, (i) inflation in price of sugarcane ₹ 48,500; (ii) excess shortage claimed in cane ₹ 67,500 ; and (iii) sala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see admitted that these items represented income. It was also borne out by records that the amounts were not included in its return by the company. The offence of deliberate understatement of income was thus clearly established according to the Inspecting Assistant Commissioner. He, therefore, found that the tax sought to be evaded came to ₹ 70,914 and the maximum penalty worked out to ₹ 1,06,371. Having regard to the facts and circumstances of the case, he imposed a penalty of ₹ 70,000. In appeal, the Income-tax Appellate Tribunal was of the view that not much turned upon the fact that the assessee agreed to the additions of the amounts in the assessment. So far as the reliance placed upon Kanodia's statement by the Inspecting Assistant Commissioner was concerned, it had no relevance or bearing to the facts of the assessment year in question. He was not the contractor employed by the assessee in the year of account. He came in only a later year. One Avinash Chand was the contractor in the year in question. He had specifically stated that be was responsible for shortages. He had also admitted that there was staff maintained by the mill at the centre at whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The assessee, according to the Inspecting Assistant Commissioner, had surrendered the amount only after the Income-tax Officer had conclusive evidence in his possession that the amount represented its income. In other words, what the High Court sought to state was that acceptance by the assessee was material to give proper weight to judge the criminality of the action which according to the High Court was not given. The High Court highlighted that, so far as ₹ 67,500 was concerned, only on being faced with facts from which there could possibly be no escape from the inference that the amount represented his income, had the assessee agreed to its inclusion. The High Court was of the view that the Tribunal was in error in brushing aside consideration of these aspects while considering the question of concealment. In respect of the addition of ₹ 21,700, the Inspecting Assistant Commissioner had relied upon the statement of Kedar Nath Kanodia as also the fact that the assessee admitted that this item represented its income. The Tribunal did not place reliance upon the statement of Kedar Nath Kanodia. It, however, omitted to take into account the fact that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eviewed only on the ground that there was no evidence to support it or that it was perverse. When a conclusion had been reached on an appreciation of a number of facts established by evidence, whether that was sound or not must be determined, not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in their setting as a whole. Where an ultimate finding on an issue was an inference to be drawn from the facts found, on the application of any principles of law, there would be a mixed question of law and fact, and the inference from the facts found was, in such a case, a question of law. But where the final determination of the issue equally with the finding or ascertainment of the basic facts did not involve the application of any principle of law, an inference from the facts could not be regarded as one of law. The proposition that an inference from facts was one of law was, therefore, correct in its application to mixed questions of law and fact, but not to pure questions of fact. In the case of pure questions of fact, an inference from the facts was as much a question of fact as the evidence of the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es but that does not absolve the Revenue from proving the mens rea of a quasicriminal offence. In Udhavdas Kewalram v. CIT [1967] 66 ITR 462, the court held that the Income-tax Appellate Tribunal performed a judicial function under the Income-tax Act and it was invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its findings on all contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. The Tribunal was undoubtedly competent to disagree with the view of the Appellate Assistant Commissioner ; but in proceeding to do so, it had to act judicially, i.e., to consider all the evidence in favour of and against the, assessee. An order recorded on a review of only a part of the evidence and ignoring the remaining evidence could not be regarded as conclusively determinative of the question of fact raised before the Tribunal. It is for the income-tax authority to prove that a particular receipt is taxable if, however, the receipt is accepted and a certain amount is accepted as taxable, it could be added but it was not accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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