TMI Blog1989 (9) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/85 Initialled 21/1/85. Case reposted as directed. Hg. 8/2/85 ITI ME R about the credit balances with the 2 Ruling Binding parties as directed. Initialled 25/1/85 Rep. heard. A/cs further examined. Evidence for credits called upon. Initialled. 8/2/85 Pl. see a/c copy obtained and filed from Raja Rajeshwari Ruling Binding Works. Initialled 8/2/85 In response to summons issued Sri V.D. Sundaram, Jupiter Ruling Binding Works, Vellore, is present and his statement is recorded. Initialled. 12/2/85 To await ITI's enquiry report from Syndicate Bank reg. bills cleared by a. Initialled 12/2/85 Pl. see report dt. 15/2/85 from the Syndicate Bank. Repost for Hg. Initialled 15/2/85 Case reposted as directed. To appear with evidence for credits and books of a/cs. Initialled 16/2 Hg. 19/2/85 (Please see 83-84) Despatched RPAD/NS/OP Initialled 16/2/85 Pl. see letter from the Syndicate Bank filed. Initialled 19/2/85 Rep. present heard. Details called for. Case adjourned to 23/2/85 Initialled Noted 19/2/ Initialled 19/2/ 31 1M ---------- 84-85 As directed by the ITO, I have contacted Sri S. Dharmaraj, Sri Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccountant is writing the books. The senior partner Sri Hari Naidu and S. Chandran are not attending to the business since they are now and then sick. The third partner S. Manoharan alone is looking into the business and looking into the accounts and not fully checked the entries : Paper from Mysore are sent to Vellore and the bills sent through banks and the bills are cleared by paying money to the bank. The entries made in the books are different dates. The difference entries are not properly explained. The assessee has also given order for binding and ruling papers and books. The bills issued by the parties now and then and payments made now and then were not entered on dates received and paid, but brought to books at the end of the year and also the payments. The bank a/cs were checked with the bank pass books and found entries were made in different dates. Large amounts were borrowed from the various finance corporations and are fully supported by discharged pro-notes and have been verified and found to be fully correct. The payments to various trade operations are not properly entered in the books. There are large debit balances of the partners and large amounts were borrowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t when he was confronted with the various disquieting features, he has stated as under --- "Sri S. Chandran, partner of M/s. Radhakrishna Stores, Vellore, approached me to correct my books of accounts in order to tally with the entries contained in their books of accounts relating to my folio for the year ended 31-3-1984. Since I am getting good business from them, in order to oblige them, I corrected the entries in my books of account with the help of my accountant Sri Pandian". "The original amount due from them (M/s. Radhakrishna Stores) before correction is Rs. 4,750. After correction, the amount as per L.F. 58 Rs. 34,296.66. The real amount due to me as on 31-3-1984 is Rs. 4,750 only and not Rs. 34,296.66" From the above, it is very clear that even though the assessee has made payments to the tune of Rs. 29,546 (Rs. 34,296 - 4,750) he has not made the entries properly in his books of accounts, possibly with a view to avoid deficit cash balance. When the statement of V.D. Sambandam was put to the assessee and his representative, they stated that the mistake may be due to the accountant, since both the partners who were in charge of the business, Sri Hari Naidu and Chandra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed that revised return voluntarily under sec.139(5) of the Income-Tax Act. Therefore, I am of the opinion that the contentions of A.1 to A.4 are acceptable." The learned counsel for the assessee relied on these findings of the learned Magistrate and submitted that it was clear that the revised return had been filed voluntarily since the learned Magistrate had explicitly held it to be so after consideration of the material on record. The learned counsel then referred to the judgment of the Madras High Court in Jerome D'Silva v. Regional Transport Authority AIR 1952 Mad. 853 and, in particular, the observations of Rajamannar, CJ., which were as under :--- "We have no hesitation in making it clear that a quasi-judicial Tribunal, like the Regional Transport Authority or the Appellate Tribunal therefrom, cannot ignore the findings and orders of competent criminal courts in respect of an offence when the Tribunal proceeds to take any action on the basis of the commission of that offence. Let us take the instance before us. The offence consists in smuggling foodgrains. For that same offence, the petitioner were criminally prosecuted. He has also been punished by his permit being su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally due at the end of the year was only Rs. 4,750 which had been corrected to Rs. 34,296 to tally with the entries in the assessee's books. The learned Departmental Representative submitted that Mr. Sambandam had testified to the dues being settled every Saturday morning and this clearly indicated that there could be no outstanding balances to the extent of Rs. 34,296 from the assessee when Mr. Sambandam had submitted that the balance due from the assessee never exceeded Rs. 5,000 at any time. He also referred to the entry in the order-sheet of 28-2-1985 wherein the Income-tax Inspector had stated that as directed by the ITO, he contacted Mr. Dharmaraj and verified from his accounts that Dharmaraj had no transaction with the assessee and further a letter had also been obtained from Dharmaraj to that effect. It was only after this, the learned Departmental Representative submitted, that on 8/3/1985 the representative of the assessee had promised to file revised return and had also promised to pay an amount of Rs. 15,000 by way of taxes due from the partners under sec. 140A which was to be with reference to the return yet to be filed of the firm. This order-sheet entry, he submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry in paragraph 2) that he had contacted Dharmaraj and verified the books of accounts which revealed that Dharmaraj had no transactions with Radhakrishna Stores. A letter was obtained from Dharmaraj. The letter dated 28-2-85 is in Tamil. What is stated is that in the last three or four years he did not have any business connection with Radhakrishna Stores. Neither in the report of the Inspector nor in the letter of Dharmaraj is there any specific mention that the copy of account of Dharmaraj in the books of the assessee was shown to Dharmaraj and he had denied such transaction with the assessee. The account as set out by us earlier starts with an opening balance which is suggestive of the account having existed in the earlier year also. Details of the transactions, if any, in the earlier year are not recorded nor do the specific transactions of that year appear to have been put to Dharmaraj. What has been obtained is only a very general statement. The assessee in reply to the penalty notice on 2-7-1985 submitted that "While examining the books of accounts, there was a credit of Rs. 20,000 taken from a Book Seller and the said party denied the advance. Anyway, the assessee has tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not adduce any proof nor seek for the matter being put to test. This fact cannot be ignored and this militates against the plea of the assessee that there was no concealment. 10. Regarding the difference in the balances with Jupiter Binding and Ruling Works, the I.T.O on 3rd July, 1985 had written to the assessee as under :--- "As per your books you have shown a credit balance of Rs. 34,226.58 in LF 240 in the name of M/s. Jupiter Binding and Ruling Works, Vellore as against the correct amount of Rs. 4,750 actually due to the party. This was found out after verifying the books of M/s. Jupiter Binding and Ruling Works, Vellore and after examining on oath Sri V.D. Sambandam, the proprietor of the shop. Only after the statement given by Sri V.D. Sambandam, along with the books of accounts maintained by him were shown to you and your representative, you have chosen to file the Revised Return offering a round sum of Rs. 50,000 to cover up the peak credit of Rs. 20,000 in the account of Sri Dharmaraj and the difference amount of Rs. 29,547 (Rs.34,297 - 4,750). In the circumstances, it may be seen that you have not filed the Revised Return voluntarily. It was filed only after you ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of relevant entries in the assessee's own books in the subsequent year to show that disbursements to the extent of Rs. 29,546 (Rs.34,226.58 less Rs. 4,750) had been made in the subsequent year only. From the facts stated the assessee does not dispute that Rs. 34,226.58 was due from the assessee to Jupiter Binding and Ruling Works. The assessee submits that the amount was paid in the subsequent year whereas according to Jupiter Binding and Ruling Works only Rs. 4,750 was due from the assessee at the end of this year which means the balance amount had been paid in this accounting year itself. The proprietor of Jupiter Binding and Ruling Works stated that there were several erasures and overwritings made at the instance of the partners of the assessee firm. Here again, therefore, the assessee has not discharged the onus of showing that there was no concealment of income. 11. The aforesaid is the factual position. The question that now remains to be decided is whether the filing of the revised return showing an additional amount of Rs. 50,000 was voluntary or not. In the prosecution case, it has been held categorically by the learned Magistrate that the filing of the return was volun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y because his determination may not bind some other body or person. The Supreme Court had further observed that when any question properly arises before an ITO in the course of proceedings for assessment, nothing in the I.T. Act prevents the ITO from determining the quantum of the amount because within the limits assigned to him under the Act, the ITO would be a Tribunal of exclusive jurisdiction for the purpose of assessment of income-tax. It seems to me that after the decision of the Supreme Court, although the case arose under the I.T. Act, it is doubtful if any broad proposition can be stated to the effect that the findings and orders of courts of law should be treated as conclusive in proceedings before quasi-judicial Tribunals. The question, in my opinion, has to be considered in every case by going meticulously into the relative provisions of the statute under which the quasi-judicial Tribunal is created and its powers defined. The principle I am able to extract from the Supreme Court decision is that where a statute creates a Tribunal and invests it with jurisdiction to go into certain legal relations or results and also provides for a hierarchy of appellate, revisional or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions with Dharmaraj were not correct or that the transactions with Jupiter Binding Ruling Works were not correct, but the assessee does admit that payments and disbursements were not always recorded as and when made. Having regard to the sequence of order sheet entries and which entries were not made available to the learned Magistrate nor relied upon by the Revenue before him and which gives a totally different dimension to the facts, we are compelled to come to the conclusion that the revised return filed was not voluntary. Had these order sheet entries been not placed before us, we would also have come to the same conclusion which the learned Magistrate had come to, namely, that the revised return filed was voluntary. 13. We have necessarily to be very slow in proceeding to decide whether penalty should be levied in a case like the present one where the assessee has gone through the trauma of defending criminal prosecution and had secured acquittal, when the order sheet entries which were available with the Revenue had not been relied on before the Hon'ble Court trying the prosecution case and is sought to be relied on before us and which evidence gives a differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 34,296. Beyond stating that the amount was paid only next year, the assessee let in no evidence to show that such payments were actually made only next year. In spite of a serious allegation having been made against one of the partners by Sambandham, the assessee did not consider it necessary to ask for Sambandham to be produced for cross-examination. Having regard to the aforesaid state of evidence, it is not possible to come to the conclusion that the breach of the requirement of the provisions of the Income- tax Act in the present case could be considered venial, that is pardonable. Therefore, there is no option left with us but to sustain the imposition of a penalty under the provisions of section 271(1)(c), notwithstanding the fact that the order-sheet entries were not relied on by the Revenue in the course of prosecution proceedings, and the assessee had to go through the trauma of the same and the assessee had been acquitted, and were relied on for the first time only before us. According to our decision, penalty will be imposable only in respect of the peak credit of Rs. 10,000 in the account of Dharmaraj and the difference of Rs. 29,547 in the account of Jupiter Ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X
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