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2006 (8) TMI 156 - HC - Income TaxPenalty levied u/s 271(1)(c) - Books of account rejected from year to year - Substantial additions accepted by assessee - The assessee persisted in maintaining the books of account in the same way - HELD THAT:- We have gone through the order passed by the Tribunal. With due respect to the Tribunal, we must say that it has ignored the mandatory direction issued by this court. Not only this, it has conveniently ignored the observations made by this court by not taking into consideration the findings recorded by the Inspecting Assistant Commissioner and the reasons which persuaded him to culminate the proceedings against the interests of the assessee, the Tribunal also did not consider the effect of and the fact that the assessee was persisting in maintaining the books of account in the same manner which were, for the earlier assessment years, found unreliable. Unfortunately, the Tribunal, for the reasons best known to it, has observed the order passed by this court in its complete breach. The Tribunal, on one side, was referring to the observations of the court to the effect that the assessee had failed to discharge the burden which lay on it under the Explanation but on the other hand the Tribunal held that the burden was upon the Revenue to prove that the assessee was guilty of fraud or gross or wilful neglect. This approach of the Tribunal is patently perverse. On neglect, the Tribunal observed that there was no gross or wilful neglect on the part of the assessee. This again was illegal. The Tribunal was also unjustified in holding that the matter could be decided on the strength of the material available in the form of diaries. If the income had to be assessed under section 145(1), then the presumption would be that the income was not properly returned and if the very same conduct is repeated for the following years, then there is no escape from the clutches of the words" gross/wilful neglect" on the part of the assessee. Even otherwise, the Tribunal was unjustified in holding that the imposition of the penalty may not be possible for a particular assessment year in view of the persistent neglect for past years. Taking into consideration the totality of the circumstances, the observations made by this court, in the earlier proceedings between the same parties for the same years, we are of the opinion that the Tribunal was unjustified in interfering in the matter. The reference is answered in favour of the Revenue. The order passed by the Tribunal is quashed.
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