TMI Blog2008 (4) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... als are 1984-85, 1985-86, 1986-87 and 1987-88. Facts: 3. A search was conducted on the premises of the assesses on 14 th and 15 th of October, 1987 and incriminating documents evidencing concealment of income by the assessee were unearthed apart from cash and jewellery found at the time of search. It was found that the appellant was maintaining double set of books and was accounting for only 50% of sales in the regular set of books. This fact was admitted by Shri J.S. Ramesh, a partner of the firm in the statement recorded under Section 132(4) of the Act. Shri J.S. Ramesh is the person-in-charge of the entire group. The total turn over suppressed by the assessee for the assessment year 1987-88 was found to be to the tune of Rs.44,07,783/-. These have been discussed in detail in the order of assessment. Assessing Officer estimated that the sales of the assessee were Rs.50,000/- per day, whereas the accounted sales were not found even 50% of the total sales. Apart from this, it was found that certain purchases were also not being accounted for. Similarly certain payments made were not being accounted for. All these were pointed out to the assessee. The assessee came f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r additional incomes and then he proceeded to make estimates of the sales and the profits that would have arisen thereon. It is quite clear that at the end of the long session of questioning (coupled with the fact that in respect of current period there had been discovery of suppression of sales) and inducement had been offered in the form of question 88. At the same time the appellant was quite apprehensive that there would be a lot of difficulties, litigation, etc. in store, regard had of the fact that for the current period, suppression had been discovered. Although the appellant's partner knew that no books, documents etc. relating to the earlier periods had been discovered, he was aware that the discovery of books for the current period could lead to litigation in respect of the earlier years incomes, by a process of extension. To avoid this litigation, and in order to purchase peace, he offered additional amounts for taxation in the firm's hands. A perusal of the statement accompanying the revised return also clearly showed that the higher incomes were returned with the following legend "Total income as agreed before the DDI", (emphasis supplied). This coupled with the fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a proposition. Evidently, huge amount of unexplained investments including unexplained stock was found at the time of search. Ultimately, almost the same amount of income was offered by the assessees over a number of years. As the tax rates over the entire period was more or less the same, the tax effect, either from the point of view of the Dept., or the assesses would have more or less the same, had the entire undisclosed assets been subjected to tax in the year of search or the entire income was spread over a number of years as has been done in the present assessments. In view of the deposition given u/s. 132 (4) followed by the cooperating attitude of the assesses in paying up the tax, it would be clear that no penalty u/s. 271 (1) ) would have been leviable had the entire undisclosed income been assessed in the year of search. Instead of going for that simple way, Sri Ramesh went into the question of admitting undisclosed income on estimated basis for the different past years. He must have felt that in that process alone, he would avoid the levy of penalty by the departmental authorities. The facts and circumstances strongly indicate that an inducement and an allurem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to be set aside and accordingly accepted the reference and held that in the facts and circumstances of the case, Tribunal was not right in upholding the order of the CIT (Appeals) in canceling the penalty levied under Section 271 (1)(c). It was held that in the facts of the case the penalty under Section 271 (1)(c) is clearly exigible. Reference was answered in favour of the Revenue and against the assesee. 11. Being aggrieved, the assessee has filed these appeals. 12. The only contention raised by the learned counsel for the appellant is that the Tribunal is the final fact-finding authority and its decision on the facts can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In the absence of such a question having been claimed, the High Court was obliged to accept the findings of fact arrived at by the Tribunal and then proceed to decide the question of law referred to it. Relying upon the two judgments of this Court in K. Ravindranathan Nair v. Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Century Flour Mills Ltd. v. CIT, (2001) 247 ITR 276 (SC) and K. Ravindranathan Nair's case (supra), it was held: - "Reference of the question to the High Court as noticed hereinbefore was general in nature. No question was referred as to whether the finding of the Tribunal was perverse or not. Existence of mens rea is essentially a question of fact. The Tribunal alone, as the highest authority empowered to determine the question of fact, would be entitled to go thereinto. We may, however, hasten to add that the same would not mean that the High Court will have no jurisdiction in this behalf. The High Court, it is well known, should not ordinarily disturb the finding of fact arrived at by the Tribunal. The question of law should generally arise only accepting the finding of fact to be correct." 16. In the present case, the question of law referred to the High Court for its opinion was, as to whether the Tribunal was right in upholding the findings of the CIT (Appeals) in canceling the penalty levied under section 271(1)(c). Question as to perversity of the findings recorded by the Tribunal on facts was neither raised nor referred to the High Court for its opinion. The Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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