TMI Blog1977 (4) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... t the assessee under s.271(1)(c) of the said Act in the course of assessment proceeding and as the minimum penalty imposable exceeded the limit of Rs. 1000 the case was referred to the IAC. 4. The IAC heard the assessee. The IAC has pointed out that while examining the goods account the ITO noticed a number of irregularities in recording the transactions and the irregularities showed that the books of account had not been written in a regular manner and were not properly maintained. In view of the defects and in view of the low rate of profit shown by the assessee the ITO added on estimate a sum of Rs. 16,000 to cover omission of profit. The IAC has also pointed out that further on examination of assessee s bank account the ITO found that some of the bank transactions had not been recorded in the assessee s books of account. The assessee accepted that the transactions belonged to the firm but submitted that entries could not be made in the books of account on account of mistake on the part of the Accountant. The IAC has also pointed out that some builties were retired by the assessee through the bank and though the entries relating to it were made in the books of the bank there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crepancies in the bank account but also for the irregularities in the goods account and for not adding back obvious inadmissible expenses. The IAC took the view that the Income returned being much less than 80 per cent of the assessed income the Expln. to s.271 (1)(c) was applicable in the case of the assessee. The IAC also held that the assessee s contention of mistake on the part of the Accountant for the discrepancies in the bank account had no basis at all and that the assessee was not able to show how cash was taken out of the books and again returned back to it and so the IAC held that the entirely of the circumstances clearly indicated that unrecorded transactions of the bank were made out of funds of concealed income available with the assessee. The IAC, therefore, held that the assessee concealed particulars of his income or gave inaccurate particulars thereof. He also held that the minimum penalty imposable was Rs. 4,219 and so he imposed a penalty of Rs. 7,500 against the assessee. 8. Being aggrieved by the order of the IAC, the assessee has filed the present appeal on the ground that the penalty order is liable to be cancelled and that the assessee is not guilty of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 10th March, 1964 9th March, 1964 Rs. 27,188.00 10th July, 1964 21st July, 1964 Rs. 6,100.00 16th Sept., 1964 21st Sept., 1964 Rs. 10,000.00 20th Nov., 1964 21st Nov., 1964 Rs. 27,923.00 22nd Dec., 1964 23rd Dec., 1964 13. The ITO asked the assessee to explain the discrepancies in the dates and the assessee filed written explanation. Regarding the builty of Rs.14,130 it was shown by the assessee that he retired the builty from the bank on 5th Mar., 1964 and delivery of goods were taken on 6th Mar., 1964. Thus the ITO verified from the books of account and he had held that the discrepancy in the dates seems to be an error while taking down the figures. Regarding Rs. 9,966 it was contended before the ITO that the books of accounts were debited on 9th Mar., 1964 and the money was given to employee for taking the builty from bank but since the builty could not retire on 9th Mar., 1964 due to the late arrival of the employee and so it was done on 10th Mar., 1964 which was recorded in the bank books. Regarding the also last four items it was contended before the ITO that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... builties were taken from the cash balance available from the rokar from the relevant dates. The Income-tax Officer held that the contention of the assessee that builties in question were retired out of the cash available in the cash books cannot be accepted as these transactions were not at all recorded in the books of account and were completely unaccounted for. The ITO took the peak credit during the period of Rs. 15,223 which he took as assessee s investment in unaccounted for transactions out of concealed income. He further estimated net income of Rs. 3,000 on this transaction and thus made an addition of Rs. 18,000. 16. Now the question arises whether under such circumstances this amount of Rs. 18,000 should be treated as concealed income of the assessee. Before us no fresh materials have been placed excepting the assessment order of the ITO. Admittedly in the case the income returned was Rs. 27,378 and the income finally assessed on 28th Dec., 1973 is at Rs. 66,070. Under such circumstances it cannot be doubted that the Explanation to s.271(1) of the said Act is applicable. The Explanation lays down that where the total income returned by any person is less than eighty per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year the assessee has made investments which are not recorded in the books of account, and the assessee offers no explanation about the nature and source of investments or the explanation offered by him is not satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. 19. The ITO has clearly pointed out that the transactions not recorded in the assessee s books of account were in between 18th Nov., 1963 and 17th Feb., 1964. The financial year relevant to the assessee year 1965-66 will be 1964-65. This means that the financial year will commence from 1st Apr., 1964. All the transactions are prior to 1st Apr., 1964. Thus in view of s.69 no addition could be made for the transactions not recorded in the assessee s books of account in between 18th Nov., 1963 and 12th Feb., 1964 legally. The learned departmental representative has submitted that by the second assessment order the addition of Rs. 18,000 has been made and the learned counsel for the assessee has conceded before us that after the second assessment order no appeal was filed before the AAC. The learned departmental representative has submitted that when the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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