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TMI Blog1973 (3) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... ure French coffee as alleged by him. In that view, he estimated the net profit in sales of chicory at Rs. 25,000 and in sales of coffee at Rs. 2,000 as against the profit of Rs. 1,892 returned by the assessee. The result, was that a sum of Rs. 25,108 was added as the net profit in the coffee-chicory business. In relation to the assessee's business in biscuits, the Income-tax Officer also estimated income at Rs. 27,000. He also initiated penalty proceedings under section 28(1)(c) and levied a penalty of Rs. 36,000. There was an appeal to the Appellate Assistant Commissioner, both against the original order of assessment as also against the order levying penalty. In that appeal it was contended by the assessee that some of his purchasers have been examined behind his back and that he should be given an opportunity to cross-examine those persons. In the light of this contention, the Appellate Assistant Commissioner felt that the assessee should be given an opportunity to cross-examine the various purchasers who had been examined by the Income-tax Officer and that the accounts of the assessee should also receive a further scrutiny. In that view, he set aside the assessment and directe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellate Assistant Commissioner it was Contended by the assessee that there were no fresh facts or evidence apart from those available at the stage of the original assessment, that those facts are quite insufficient to reject the assessee's plea of manufacture and sale of French coffee, and that even the evidence of the purchasers did not establish that any extra money was paid over and above the sale price mentioned in the bills. The Appellate Assistant Commissioner, however, agreed with the Income-tax Officer and held that the assessee should have sold chicory as such and not French coffee. But he found that on a correct calculation, the addition in this regard should be Rs. 32,559 and not Rs. 25,108 as fixed by the Income-tax Officer. There was a further appeal to the Tribunal by the assessee. The Tribunal, on a consideration of all the facts and circumstances, held that the assessee did not in fact manufacture or sell a mixture of chicory and coffee as claimed but that he sold only chicory as such, but that the estimate made by the Appellate Assistant Commissioner at Rs. 32,559 was not justified as the materials available were not sufficient to find that the assessee sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l held that the materials are sufficient to disclose deliberate concealment of income on the part of the assessee. The Tribunal, however, reduced the penalty to a sum of Rs. 10,000 having regard to the fact that it had reduced considerably the additions made in respect of the chicory business. Before us the learned counsel for the assessee concedes that he cannot sustain the legal plea that section 271 cannot be invoked in this case, in view of the decision of the Supreme Court in Jain Brother's v. Union of India . But the learned counsel is very vehement in his submission that the materials available cannot form the basis for a finding that there has been a deliberate concealment of income in this case. It is pointed out by the learned counsel that the addition made in relation to coffee business was due to the fact that the assessee's explanation has not been accepted and that the mere non-acceptance of the explanation offered by the assessee will not lead to the inference that there has been a deliberate concealment of income. It is true that in this case the addition came to be made by the Income-tax Officer, in relation to the coffee business after rejecting the plea of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt from the falsity of the explanation given by the assessee, the department must have before it before levying penalty cogent material or evidence from which it could be inferred that the assessee has consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that the disputed amount is a revenue receipt. No doubt the original assessment proceedings for computing the tax may be a good item of evidence in the penalty proceedings but the penalty cannot be levied solely on the basis of the reasons given in the original order of assessment." We are not able to construe the said decisions as lying down that there should be fresh materials at the stage of the penalty proceedings to establish that there has been a deliberate concealment of income and that the materials gathered at the stage of assessment have to be altogether eschewed. It will be clear from the passage above extracted, that the original assessment proceeding is a good item of evidence in the penalty proceedings as well, but that the penalty cannot be levied solely on the basis of the finding given in the order of assessment. Therefore, the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the materials available in this case are sufficient to lead to the inference that there was deliberate concealment of income. As already stated, the evidence of the purchasers from the assessee who were examined by the Income-tax Officer shows that the assessee should have sold chicory as such without manufacturing French coffee. The assessee has not furnished any evidence at the stage of the penalty proceedings to prove that he in fact sold French coffee and not chicory as such. Therefore, the finding which is based on some positive materials which has not been challenged by the assessee in these proceedings, can form the basis for a finding that there is deliberate concealment. Even on the basis of the assessee's own bills, the profit earned in the sales of imported chicory alone apart from the quantity of chicory purchased locally, should be to the tune of Rs. 20,000 at the rate of Rs. 20 per case as pointed out by the Tribunal. But the income returned by the assessee is only a sum of Rs. 1,892. This shows that there is deliberate concealment. On the materials on record we have to agree with the view taken by the Tribunal in this case. The result is that the reference is answ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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