TMI Blog1970 (8) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is a firm, dealing in kapas (unginned cotton), among other things, with its head office at Davangere and a branch at Hubli. It purchases kapas and, after ginning, sells it as lint. During the previous year relevant for the assessment year 1956-57, considerable disparity was noticed in the results disclosed in respect of trading in hapas and cotton at Davangere and Hubli. On a closer examination of accounts, the Income-tax Officer found that on the last day of the accounting year, ending on November 14, 1955, a sum of Rs. 4,87,973 had been credited to the account of one Sharanappa, the assessee's purchasing agent, and a corresponding sum debited to cotton and kapas account. This amount was claimed to be the cost of 18,217 maunds of Jayadh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In regard to another account known as " gunnies account " a sum of Rs. 41,571 was debited to the accounts of wages : paddy, cotton seeds, groundnut cake and coriander. Since no details as to how these respective sums shown against those heads were arrived at, the assessee was asked to furnish the particulars of the gunnies used for each of those commodities, and the details regarding the wages of Rs. 14,000. Since the assessee did not choose to comply, a further sum of Rs. 16,000 was added to the income as inflation expenses. The first appeal by the assessee was dismissed. On further appeal to the Tribunal, a contention was urged that for the assessment year 1958-59, cotton seeds to the extent of 17,020 maunds had been shown in excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing to the demise of the partner concerned and the clerk, it was not possible to ascertain the correct facts in respect of the sum of Rs. 4,87,973 relating to the cotton and kapas account, and, in these circumstances, a sympathetic view might be taken. The fresh explanation offered by the assessee was also considered and rejected. It was pointed out by him that the sale proceeds of cotton seeds to the extent of Rs. 3 3,344 should have gone to reduce the cost of kapas instead of being shown as credited to Sharanappa, as it was not shown that he ever purchased cotton seeds. He, therefore, confirmed the order levying penalty, but reduced the penalty to Rs. 75,000, taking into consideration the reduction given by the Tribunal in the quantum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case. We are of the opinion that there is no force in any of the above contentions of the learned counsel for the assessee. It is clear from the several attempts of a prevaricating nature made by the assessee to explain away the discrepancy in regard to the entry of Rs. 4,87,973, which could only have been explained by either accounting for the value of closing stock of cotton seeds or the sale price thereof, that the assessee has failed to account for the cotton seeds deliberately. If the cotton seeds had been accounted for in any of the two ways mentioned, the value of it should have gone towards the reduction of the purchase price of kapas. Hence, it is clear from this omission that the assessee stood to gain in two ways, inasm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against the assessee, and no question of recomputation of penalty would arise. Since we are in agreement with this submission of the revenue, we do not consider it necessary to examine the contention that there has been in fact no concealment in respect of the sum of Rs. 16,000 as urged on behalf of the assessee. In Mansukhlal case , the facts were as follows : The assessee therein returned an income of Rs. 45,904 for the assessment year 1948-49. The Income-tax Officer added two items of Rs. 24,000 and Rs. 90,000 as profits and income from undisclosed sources, which had been concealed by the assessee. A penalty of Rs. 62,000 was imposed within the maximum limits provided by section 28(1)(c) of the Act. On appeal, the Appellate Assistan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect. The relevant passage is at page 554 of the above cited report and runs thus : " In the above view of the matter, it must be held that the penalties which have been provided by section 28(1) are meant for the acts of omission or commission which are set out therein and once an assessee is proved to have been guilty of them the penal provisions are attracted and with reference to clause (c) irrespective of the amount concealed. Thus the answer returned by the High Court to the question referred was correct." In the light of the above enunciation, we are unable to accept any of the contentions advanced on behalf of the assessee. For the above reasons, the question referred has to be answered in the affirmative and against the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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