TMI Blog1994 (11) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... by an estimated round sum figure of Rs. 10,00,000. He also noticed the difference of Rs. 19,15,002 in the receipts declared by the assessee at Rs. 1,09,18,314 and as per T.D.S. Certificates submitted at Rs. 1,28,33,316 and added the same to the income of the assessee. 3. The Commissioner of Income-tax (Appeals), Visakhapatnam, upheld both the additions as the assessee could not explain the difference in the receipts and the rate of profit including the unaccounted receipts of Rs. 19,15,002 was 27.62% as against 33% disclosed by the assessee in the earlier year. He observed paras 10 and 11 as under : " Suppression of contract receipts : P L A/c. accompanying the return of income, disclosed the gross contract receipts at Rs. 1,09,18,314 whereas the T.D.A. Certificates showed that the gross receipts were Rs. 1,28,33,316. The difference of Rs. 19,15,002 has been brought to tax. Attempting reconciliation between the two conflicting figures, the learned AR has fairly conceded that gross receipts amounting to Rs. 6,90,088 were not inadvertently disclosed as these were receipts against escalation bill which were directly credited to the personal accounts of the principal contractors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the disclosed profit before depreciation was 27.62% of the gross receipts. The disclosed profit for the preceding year was almost 13%. Although in the cases of contractor's lesser margin of profits is considered reasonable, the appellant itself had been such higher profit in the preceding year and the proportion of sub-contractor's rates, the profit before depreciation works out to Rs. 45.96 lakhs approximately. Whereas by making the addition of Rs. 10 lakhs, the Assessing Officer has assessed the net profit at Rs. 37.47 lakhs only. I would view the addition made on assessment as reasonable. " 4. On application by the assessee under section 154, the Commissioner of Income-tax (Appeals) reduced the addition of Rs. 10,00,000 to Rs. 7,45,253 as some mistake in the computation with the last year's occurred. 5. The Income-tax Officer levied penalty under section 271(1)(c) in respect of these additions and also for no disallowance for depreciation of Rs. 4,38,040 for which the explanation was given by the assessee. The Commissioner of Income-tax (Appeals) upheld the penalty for suppression of receipts and disallowance of depreciation, by but deleted the penalty relating to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee for the year under consideration. The gross profit addition of Rs. 7,45,253 is to be recomputed in view of the directions to exclude Rs. 6,90,088 and Rs. 3,23,719 from the income of the assessee which were taken in estimating the gross profit for this year. Assessing Officer shall consider the contention of the assessee, if any, to justify that either no addition was called for or a lower addition than the amount computed on comparison with the last year's result was called for. 9. As regard penalty for concealment, we are of the opinion that the suppression in receipts of Rs. 8,28,781 is the income which was concealed or particulars of which are concealed by the assessee. The other amount covering gross profit addition would be a matter of estimating the profit or disallowance of routine nature and would not constitute concealment on the part of the assessee. As aforesaid the sum of Rs. 8,28,781 represents concealment because of suppression of receipts detected on the basis of tax deduction certificate submitted by the assessee, but no penalty with respect thereto can be levied because the returned income as wen as the assessed income is a loss and as the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for levy of any penalty in case of assessed loss. 11. In respect of somewhat analogous provisions as they were appearing in section 143(1A), the matter came up for consideration before Delhi High Court in the case of Modi Cement Ltd. v. Union of India [1992] 193 ITR 91, and before the Allahabad High Court -- Lucknow Bench in the case of Indo-gulf Fertilisers Chemicals Corpn. Ltd. v. Union of India [1992] 195 ITR 485. Similar matter was again considered by the Delhi High Court in the case of J.K. Synthetics Ltd v. Asstt. CIT [1993] 200 ITR 584, where their Lordships held : " It is clear from the provisions of section 143(1A) of the Income-tax Act, 1961, that there has to be on increase in the income-tax payable as a result of the adjustments made under section 143(1)(a) and only in that situation the tax payable has to be further enhanced by a sum equal to 20% of such increased tax liability. Where the assessee has submitted a return disclosing a loss and if after the process of adjustments the net result is still a loss there cannot be any question of any further tax liability accruing, and as such no tax would be payable much less any additional tax on the amount by which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its deterrent effect, the purpose of the levy of the additional income-tax is to persuade all the assessee to file their returns of income carefully to avoid mistakes. In two recent judicial pronouncements it has been held that the provisions of section 143(1A) of the Income-tax Act, as these are worded, are not applicable in loss cases. The Bill, therefore, seeks to amend section 143(1A) of the Income-tax Act, to that whereas a result of the adjustments made under the first proviso to section 143(1A) the income declared by any person in the return is increased, the Assessing Officer shall charge additional income-tax at the rate of twenty per cent on the difference between the tax on the increased total income and the tax that would have been chargeable had such total income been reduced by the amount of the adjustments. In cases where the loss declared in the return has been reduced as a result of the aforesaid adjustments have the effect of converting that loss into income, the bill seeks to provide that the Assessing Officer shall calculate a sum of (referred to as additional income-tax) equal to twenty per cent of the tax amount of the adjustments as is it had been the total i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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