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TMI Blog1971 (12) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961 ? and 3. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in reducing the penalty under section 271(1)(c) from Rs. 70,000 to Rs. 5,000?" The first two questions do not need any reframing. The third question does not, however, clearly, bring out the matter in dispute between the parties, and as such it is reframed as below: "Whether, on the facts and in the circumstances, the finding of the Tribunal that the assessee had not concealed income to the extent of Rs. 67,500 and Rs. 21,700 within the meaning of section 271(1)(c) of the Indian Income-tax Act, 1961, is correct in law ?" The facts necessary for the decision of the question may now be stated. The relevant assessment year is the year 1958-59. The assessee filed his return but that return was not accepted. The Income-tax Officer made certain additions and disallowed certain expenses. Of the various amounts disallowed by the Income-tax Officer, we are concerned in this reference with three items, i.e., (1) inflation in price of sugar-cane of an amount of Rs. 48,500, (2) excess shortage claimed for cane, Rs. 67,500, and (3) salary of out-station staff of loading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also noticed that the actual shortage was 21,143 maunds valued at Rs. 26,429 while the assessee claimed Rs. 1,34,661 for shortage at 2%. In view of these facts, the assessee accepted the addition of Rs. 67,500 under this head made by the Income-tax Officer. The Inspecting Assistant Commissioner, taking into consideration all these facts, came to the conclusion that the assessee was reducing his income by debiting false claim for excess shortage. He held, therefore, that in respect of this item the assessee was guilty of intentional concealment. In respect of the third item of disallowance, relating to salary of outstation staff of loading contractors, the Inspecting Assistant Commissioner referred to the statement of Sri Kedar Nath Kanodia, who stated that he had employed his own men at the out-centres, and there was no employee of the mill working at the centres. He stated that the payments to the staff had been made by him and that the company had made no payments. He also stated that the company's accountant had obtained signatures of the members of the staff on salary sheets and this procedure was followed in respect of the other contractors also. It appears that while ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year of account. It referred to the statement of one Avinash Chand, who had stated that the excess shortage of 2% had in fact occurred and further that the assessee maintained staff at the centres at which the loading contractors were working. It also noticed that Avinash Chand had gone so far as to state the particulars of the staff maintained at the centre. The Tribunal did not give a categorical finding that it had relied upon the statement of Avinash Chand. It, however, held that in view of the fact that Avinash Chand had given a statement in favour of the assessee in respect of additions of two amounts, i.e., Rs. 67,500 and Rs. 21,700, the assessee could have taken up the stand that the addition of these two amounts was unjustified. Taking this view, it held that on account of the mere fact that the assessee had agreed to the additions, did not indicate "any criminality in its action to conceal any portion of its income". Considering the disallowance of an amount of Rs. 48,500, the Tribunal was of the view that in the past also the assessee had been inflating the price of the sugarcane and that it had agreed to similar additions in the years 1955-56 and 1956-57, to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing was vitiated. The omission of the Tribunal in a case to consider relevant material evidence vitiates its finding. (See Omar Salay Mohamed Sait v. Commissioner of Income-tax, and Udhavdas Kewalram v. Commissioner of Income-tax ). It is as such necessary to see if there has been any such omission as would vitiate the finding that there has been no concealment. In respect of the concealment of Rs. 67,500, the Inspecting Assistant Commissioner had relied upon the statement of Sri Kedarnath Kanodia, and the fact that the actual shortage was only 21,143, maunds, valued at Rs. 26,429, while the assessee had claimed Rs. 1,34,661 as also the fact that the assessee had surrendered the amount of Rs. 67,500 after being faced with the above facts. Apart from this, he had also relied upon the circumstance that the assessee had admitted that this amount represented its income, and did not appeal against the order. The Tribunal has not at all considered the fact that the value of the shortage was only Rs. 26,429. It has also brushed aside the fact that the assessee had agreed to the addition. The Tribunal has not reversed the finding of the Inspecting Assistant Commissioner that the assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is incorrect in law. We now come to the question No. 2. This item relates to the disallowance in respect of purchase of cane. Although the Inspecting Assistant Commissioner had given a number of reasons for holding that the assessee was guilty of concealment, the Tribunal has not adverted to any of these reasons, neither has it given a finding that it was accepting the reasons given by the Inspecting Assistant Commissioner. For holding that the assessee was guilty of concealment in respect of this amount, it took into account the conduct of the assessee in the past years, it had agreed to some additions, and penalties were levied in respect of such concealment to which the assessee did not object. The fact that the assessee had been guilty of concealment in past years cannot lead to the inference that he is guilty of concealment in the year in dispute. The past record of the assessee was not relevant for the purpose of deciding as to whether there has been such concealment as to warrant imposition of penalty. As has been seen, penalty proceedings being quasi-criminal in nature, the facts necessary to attract the penal provision of section 271 of the Act must be clearly proved i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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