TMI Blog2002 (11) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... er on the respondent. The brief facts of the case as disclosed by the pleadings of the appellant are the fol1owing: The assessee is the proprietor of Chemmannur Jewellery, Thrissur. The assessment year concerned is 1989-90. The assessee filed a return of income showing a net loss of Rs. 1,27,600. The total turnover was Rs. 1,44,26,152 and the gross profit declared was only Rs. 7,99,933. The Assessing Officer felt that it is too low as the percentage of gross profit worked out to be only at the rate of 5.54 per cent. Therefore, the Assessing Officer started investigation by calling for various details including books of account. Finally, the bill books were impounded under section 131(1) on November 26, 1991, by the assessing authority for further investigation. The assessee, on the very next day, i.e., November 27, 1991, preferred a petition before the Commissioner of Income tax under section 273A making an offer of Rs. 15 lakhs; by way of income from business to cover the undisclosed income for the relevant year. He also offered an additional amount of Rs. 1 lakh towards probable disallowance out of expenditure charged to the profit and loss account. The Assessing Officer, takin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to section 271(1)(c). But, the Appellate Tribunal, by annexure C order dated October 27, 1998, affirmed the order of the first appellate authority. The Tribunal held as follows: "On the facts and in the light of the ratio of the decisions relied on by the learned representative of the assessee, we are inclined to hold that no case of concealment has been established in this case in order to invoke the provisions of section 271(1)(c) and that the Commissioner of Income-tax (Appeals) was justified in cancelling the penalty levied under the above section. His order is accordingly upheld. In the result, the Revenue fails and the appeal filed by it is dismissed." The Revenue appeals to this court stating that the following substantial questions of law arise out of the decision of the Appellate Tribunal: "1. Whether, on the facts and in the circumstances of the case, and also in the light of Explanation to section 271(1)(c), the Tribunal is right in law in cancelling the penalty ? 2. Whether, on the facts and in the circumstances of the case, and the question agitated before the Tribunal being the levy of penalty under section 271(1)(c) should not the Tribunal have on its ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l bind as a precedent. In view of the above principles, we are not referring to all the decisions mentioned above, but will be considering only those decisions which are strictly relevant. But, before considering those decisions, it will be beneficial to refer to the relevant statutory provision. The relevant portion of section 271 as it stood at the relevant time reads as follows: "(1) If the Assessing Officer or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, - . . . (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. Explanation 1. -Where in respect of any facts material to the computation of the total income of any person under this Act, (A) such person fails to offer an explanation or offers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offered covered the said two amounts also, no separate additions were made in the income on the basis of those loans. On the basis of the above view of the facts, the Assessing Officer decided to initiate penalty proceedings which were finalised as per annexure A. But, the Commissioner of Income-tax (Appeals) set aside the said order. The main ground for reversal of the penalty order is that the Assessing Officer did not establish concealment from the part of the assessee. Reliance is placed on the words of the Assessing Officer that "the Assessing Officer has almost established concealment on account of net valuation of closing stock, inflation of purchases, suppression of sales, inexplainable cash credits in the form of fresh loans, etc..." the appellate authority also relied on the report of the Assistant Commissioner of Income-tax, Thrissur, sent to the Commissioner of Income-tax, Cochin, on December 24, 1991, in connection with the Settlement Commission's proceedings. In the said report, it is stated that no foolproof case of concealment is made out. On the basis of the above finding, the penalty order was set aside by the first appellate authority. More or less relying on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (B) to Explanation 1 to the section 271(1)(c) of the Act. In this case, the Tribunal had erroneously cast the burden on the department. In these circumstances, we are of the view that the Appellate Tribunal should have considered the effect of the Explanation to section 271(1)(c) while judging the validity of the penalty order. The omission to consider this aspect gives rise to a question of law from the order of the Tribunal justifying interference by this court. Therefore, we feel that this is a matter requiring re-examination by the Appellate Tribunal. Since the Tribunal has to consider the entire matter afresh both in respect of facts and in respect of law with particular reference to Explanation 1(B) of section 271(1)(c) of the Act, in the light of the principles laid down by the decisions of the Supreme Court and of this court referred to earlier, we do not think it necessary to answer any of the questions formulated by the Revenue on which notice is ordered at the time of admission. Hence, we decline to answer those questions. We accordingly set aside the order of the Tribunal impugned in this appeal and remit the matter to the Tribunal for fresh disposal in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
