TMI Blog1985 (1) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer in the following terms : " According to the assessee, it is incurring heavy losses in the unit Kerala Bhooshanam, year after year. However, the claim for loss is not supported properly and in the assessments the claim for deduction on account of loss in Kerala Bhooshanam is limited to the salary and wages paid to the staff and workers. Perhaps it may be true that the assessee might have incurred loss in some years. It is also equally possible that the assessee might have earned some profit in the unit Kerala Bhooshanam especially in view of the fact that large quantities of newsprint quota is available to Kerala Bhooshanam. Hence, it appears to me that a detailed investigation and examination of the accounts and affairs of the unit Kerala Bhooshanam is necessary. For a proper and fair adjudication of the matter, it is necessary to examine the books of account if any maintained by Kerala Bhooshanam. It is also necessary to find out the number of copies which can be obtained from a ton of newsprint, the price per copy, etc. The inter-unit transactions also require verification, Sri K. P. Sreedharan Nair and V. K. Nandakumaran, Inspectors, are directed to conduct a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Act. Notice under section 148 was issued on 4-3-1986 for the assessment years 1981-82 and 1982-83 and on 25-7-1986 for the assessment year 1980-81. Certain additions and disallowances were made to the income originally assessed as follows : Assessment year 1980-81 : Inflation in the consumption of newsprint in Kerala Bhooshanam Rs. 2,20,429 Income under other sources : Discrepancy in the account balances : Rs. 2,46,566 Less : Inflation considered above : Rs. 2,20,429 --------------------- Net assessed under other sources : Rs. 26,137 --------------------- Assessment year 1981-82 : Inflation in the consumption of newsprint in Kerala Bhooshanam : Rs. 2,46,085 Inflation in the purchase of newsprint in Manorajyam Unit : Rs. 1,52,524 --------------------- Rs. 3,98,609 --------------------- Assessment year 1982-83 : Inflation in the consumption of newsprint in Kerala Bhooshanam : Rs. 4,04,118 --------------------- The assessee accepted the re-assessments. Action under section 271(1) (c) was initiated against the assessee in the course of the re-assessment proceedings, for each of these years, which resulted in the culmination of lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong after the revised returns were filed, it cannot be said that there has been no prior detection of concealment. Therefore, the learned CIT (Appeals) erred in deleting the penalty levied. 5. Sri A. Gopalakrishnan, the learned Chartered Accountant submitted that even in the original returns, on the basis of which the assessments were initially completed under section 143(3), the newsprint consumption and other expenses in respect of Kerala Bhooshanam, which was run by the assessee, was made on estimate basis. Both in the original assessments as well as in the revised assessments, the loss or income from Kerala Bhooshanam was determined only on estimate basis. Therefore, it cannot be held that there was conscious concealment of income. Further, the survey party, instead of merely collecting the information as directed by the Assessing Officer, has exceeded its jurisdiction by making a report which almost read like a preliminary assessment order. It is on the basis of the inferences drawn by the survey party as contained in its report, that the Assessing Officer has reopened the assessments. However, in order to purchase peace with the department, the assessee had, before the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and conclusions, which has ultimately led to the reopening of the assessments. The reopenment of the assessments is based on the survey report which is saddled with surmises, inferences and opinions. We are aware that we are not on the issue of validity of the reassessment proceedings, but in a penalty proceeding, the validity of the additions and disallowances can certainly be looked into. 7. The survey party has weighed copies relating to November 1985, calculated the number of sheets found therein and on that basis worked out the possible consumption of newsprint. It had compared the sales revenue with the cost of newsprint in the accounts without regard to the fact as to how the sales are accounted for in the accounts, whether on accrual basis or on cash basis and also without regard to the fact that in the sales revenue the element of profit will be embedded in it. The survey party also took the weight of the paper in grams and allowing margin of 8% worked out the number of copies that can be printed out of one metric ton of newsprint. On that basis, the newsprint consumption from 1980 to 1984 was calculated and compared with the consumption recorded in the books in order t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with returns under the amnesty scheme. As per the Circulars issued from time to time, amnesty scheme is available not only to any person hitherto not assessed, but also to persons already assessed. The benefits of the scheme are available not only in relation to completed assessments, but also in respect of pending assessments. The benefits are also available in cases where assessments were already completed, but disputed in appeal. Thus, it is an omnibus scheme intended to give an opportunity to the assessees to reform themselves. The assessee has taken the advantage of the scheme, whether it required reformation or not. There has been no prior detection of concealment by the department, except the bare suspicions and surmises. Even after the submission of the survey report no action was initiated in respect of these years to redo the assessments under section 147 of the I.T. Act. It is only after the filing of returns under the amnesty scheme, that reassessments were made taking, of course, the aid of the survey report, which, in our opinion, cannot lead to the conclusion that there has been any detection of concealment of income. Therefore, the learned CIT (Appeals) was right in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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