TMI Blog1988 (1) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer noticed that on 16-5-1973 the purchases account was debited with an anoint of Rs. 1,43,049 representing the value of 14,266 metres of cloth purchased from a connected firm M/s Raja Rajeswari Weaving Mills. A close scrutiny of the account revealed that the value debited originally was Rs. 83,619 and not Rs. 1,43,049. The assessment order states that the original entire in the day book and ledger were erased and the amount of Rs. 1,43,049 was substituted. The Income-tax Officer considered that there was an inflation in the purchase price of cloth by Rs. 59,430. When called upon to explain, the reply of the assessee was as under : 'At the time of booking orders with the overseas buyers, the purchase rate of cloth was not confirmed, the cloth purchases under Invoice No. 90/73/74 of 16-5-73 for Rs. 1,43,049.50 is of heavy quality and deep shades collar, the year has to dye two times specially for this item. Taking into account of the increase in cost of production and for maintenance of superior export quality, we are compelled to pay more rate as demanded by the manufacturer. Further, while calculating the cost price, the incentive amount on export sale is also to be taken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,43,049 was substituted for the price of Rs. 83,619. The Appellate Assistant Commissioner has give a clear finding that in the case of M/s. Raja Rajeswari Weaving Mills the Income-tax Officer had seen that originally an invoice was prepared for Rs. 83,619 which was replaced by the subsequent invoice for Rs. 1,43,049. In view of this fact that the vendor has been assessed on the basis of the higher receipts is of no moment. The assessee in the present case has not been able to explain why such a vastly higher price was require to be paid when the ITO has established that for the same quality and pattern number the price paid on earlier dates was lower by as much as Rs. 4 per metre. We have no hesitation in holding that there has been a clear concealment in the present case. Were there no legal infirmity in the matter of levy of penalty, we would have upheld the imposition of penalty of Rs. 59,430 which is the minimum penalty imposed under the law." 4. However, in the view that imposition of penalty levied by the Inspecting Assistant Commissioner was without jurisdiction, the penalty imposed was cancelled and the appeal was allowed. 5. The revenue filed an application for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncealment, was a finding of fact, and on the facts of the case no reference would lie. Therefore, the application for reference as filed by the assessee was dismissed. 8. Against this order of dismissal in RA No. 107/Coch/1980, the assessee had taken up the matter under the provisions of section 256(2) to the High Court and the High Court, it was stated at the Bar by the learned counsel for the assessee, had dismissed the application by OP No. 206 of 1981. 9. In the meanwhile, a judgment of the Full Bench of the Kerala High Court was rendered in CIT v. P. I. Issac [1987] 168 ITR 793 and the assessee being of the view that the said judgment of the Full Bench laid down the law that in similar cases the Inspecting Assistant Commissioner had no jurisdiction to levy penalty under section 271(1) (c), moved a Writ Petition in the High Court of Kerala. Judgment of this Writ Petition decided on 12-10-1987 and reported as 1987 (2) KLT 740 is reproduced in full as under : "The Senior Standing Counsel for the Government of India (Taxes) takes notice on behalf of the respondents. 2. By this writ petition the petitioner seeks the issue of a writ of mandamus directing the first respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court and in case of appeals to the Supreme Court, the courts answer the question in any manner or give certain opinion, the Appellate Tribunals would dispose of the appeals in accounts with the opinions express or answers given by the High Court or the Supreme Court. Therefore, under the scheme, the appeals is kept pending before the Tribunal and the appellate jurisdiction is retained by the Tribunal, but the High Court exercises an advisory or consultative jurisdiction.' 5. The question before the Supreme Court was whether it is proper for the High Court in appending reference to pass interlocutory orders granting stay of recovery of the tax assessed. The Supreme Court held that the jurisdiction being consultative/advisory, it is not proper to pass orders of stay especially whey the appeal itself is pending before the Tribunal awaiting the judgment of the High Court on the reference made. This decision is not an authority for the proposition that the High Court should, as and when it takes a different view on the question of law earlier decided on reference made to it, direct the tribunal to ignore the decision inter parties and dispose of the appeal in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as far as this bench of the tribunal functioning in Cochin was concerned. According to him, therefore, we would have to render our decision in conformity with the advice given in the Full bench decision. 11. The second point urged by the learned counsel was with reference to the judgment of the Supreme Court in CIT v. V. Damodaran (1980) 121 ITR 572, His submission was that the assessee had fully succeeded in the appeal before the Tribunal because the Tribunal had struck down the penalty on the ground that the Inspecting assistant Commissioner was not competent to impose the penalty and that being so the question of the assessee filing a reference did not arise. The reference filed by the assessee on factual aspects, he stated, was a reference which should never have been filed. But even if the assessee had filed the reference, a submission the learned counsel was that since it was a reference application which was a nullity in law, the order passed by the Tribunal on the same was a nullity and the further judgment of the High Court under section 256(2) dismissing the assessee's petition holding that the finding of the Tribunal that there was a concealment was a finding of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently a valid decision. The decision of the tribunal has been upheld by the Hon'ble High Court. That being so, as for as this Bench of the tribunal is concerned, the decision of the Hon'ble High Court upholding the dismissal of reference, filed by the assessee, by the tribunal is final. The result is that the finding of the tribunal on the merits, i.e., on the fact rule aspect as attends affirmed. This finding is that had there been no legal infirmity the tribunal would have upheld the imposition of penalty of Rs. 59,430. The question of our permitting the assessee to argue the case afresh on merits cannot arise in the aforesaid background. In conformity with the judgment of the Kerala High Court in ITR No. 121 of 1981 dated 15-3-1985, we hold that hate Inspecting assistant Commissioner was competent to levy penalty in this case. We further hold that in the light of the factual position stated above, the imposition of penalty of Rs. 59,430 under section 271(1) (c) has to be upheld. This we do. The result is that our offer dated 1-3-1980 cancelling the penalty and allowing the appeal of the assessee would stand reversed and the order will now be that the imposition of penalty of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of Rs. 4 per metre, i.e., Rs. 46,800. Penalty proceedings under section 271(1) (c) were initiated in the course of assessment which was made on 19-1-1976 and the matter was referred to the Inspecting Assistant Commissioner. 3. The Inspecting Assistant Commissioner in his order dated 7-3-1978 considered the explanation as was tendered before the Income-tax Officer and came to the conclusion that the Income-tax Officer had established concealment by way of suppression of stock and levied a penalty of Rs. 46,800, i.e., equal to the income concealed." 16. The assessee had raised additional ground before the tribunal that the Inspecting assistant Commissioner had no jurisdiction to levy penalty on 7-3-1978 in view of the deletion of section 274(2) of the Income-tax act with effect form 1-4-1976. The Tribunal following its earlier decision in ITA Nos. 40 to 42/77-78 agreed with the assessee on this ground and held that the penalty would fall to be cancelled. 17. The Tribunal, however, for the sake of completeness considered the merits forms he factual angel and the finding given in para 6 of its order reads as under : "For the sake of completeness, however, we would deal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stained ?" The Tribunal dismissed the application for reference stating that the decision of the Tribunal was one rendered on the facts of the case. Against this order of the tribunal dismissing the application for reference, the assessee had preferred an application under section 256(2) of the act, which was dismissed by the Hon'ble High Court in O. P. No. 112 of 1981. The arguments of the learned counsel for the assessee are identical with those advanced in the case of Rajeswari export House and the submissions of the learned departmental representative are also the same. This being so, our conclusions in the case of Rajeswari Export House would apply equally in the present case. we hold that the application for reference filed by the assessee was not a nullity and, therefore, the order of the tribunal rejecting the sake was not non est. The order of the Tribunal has been upheld by the Hon'ble High Court by dismissing the application of the assessee under section 256(2) of the Income-tax Act, 1961. This being so, on facts penalty of Rs. 46,800 would be leviable. 20. In view of the judgment of the Hon'ble High Court in ITR No. 25 of 1981 dated 13-3-1985 on the application for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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