TMI Blog2001 (10) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1986-87. Some time thereafter search and seizure proceedings in terms of section 132 of the Income-tax Act were conducted on the common business premises of the two assessees on October 14/15, 1987. During the course of search, certain goods and papers containing details of sales as well as purchases not otherwise accounted for in the books maintained by the assessees were discovered. A statement made by G. S. Ramesh, one of the partners, made a clean breast of the modus operandi adopted by the assessees in concealing the true turnover of the assessees for the relevant period. He admitted that only a part of the sales and purchases were recorded in the account books of the concerns during the assessment years referred to above. Based on the incriminating documents containing the details of the sales and purchases, the assesses were asked to explain the position with respect to earlier years. The assesses filed revised returns for the years under consideration on the basis whereof reassessment proceedings were completed accepting the figures disclosed in such returns. With the completion of the reassessment proceedings notices under section 271(1)(c) were issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees had not maintained the books of account as they ought to have in order to entitle them to the immunity under the said provision. On the merits of the controversy, the Commissioner (Appeals) opined 'that the facts and circumstances indicated that an inducement had been offered to the assessees to declare higher turnovers which the assessees accepted in order to buy peace with the Department". The search had not according to the Commissioner (Appeals) yielded any material suggesting suppression of sales for the assessment years in question, apart from a general inference that the assessees may have followed the same method of suppression as was followed by them for the assessment year 1988-89. Relying upon the decision of the Supreme Court in Sir Shadilal Sugar and General Mills Ltd. v. CIT [1987] 168 ITR 705, the Commissioner (Appeals) cancelled the orders imposing the penalties. The correctness of the orders passed by the Commissioner (Appeals) was questioned by the Revenue in appeal before the Income-tax Appellate Tribunal, Bangalore, who dismissed the same upholding the order made by the Commissioner (Appeals). The Tribunal, inter alia, held that although incriminating m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l has held that such an assurance must have been extended. It has in this regard observed as under: "Although there is nothing on record to show that he was given an assurance that no penalty would be levied, the facts, however, clearly suggest that such an inducement must have been given by the searching party." We have found it difficult to subscribe to the above line of reasoning. If there is nothing on record to support the plea of the assessees, that to penalty would be levied upon them, the conclusion of the Tribunal that such an inducement in the facts of the case been given by the search party becomes purely conjectural. The authorities invested with the power to determine the facts and record the findings have to go by what is available on record and not by what they think or assume must have happened. The assumption that an inducement must have been given by the search party is all told on a mere assumption unsupported by any material whatsoever on record. Such an assumption could not provide a sound basis for determining the rights and obligation of the parties locked in a legal battle. Even otherwise the reasons that have prevailed with the Tribunal in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact may be recorded by the Tribunal on the basis of what it considers to be admissible material. Any challenge to such a finding on the ground that the material is inadmissible or irrelevant would require the party disputing the correctness of such a finding to raise a question to that effect and have the same referred for opinion under section 256 of the Income-tax Act. The court may in any such case examines whether the finding is vitiated by any fatal defect, in that the same is recorded without any evidence, or is otherwise perverse or is supported by the evidence which is partly admissible and partly inadmissible. We are however dealing with a case where the Tribunal has come to the conclusion that there is nothing to support the plea advanced by the assessees. The absence of any material or evidence to support the alleged assurance to the assessees is not in dispute. No forensic exercise is, therefore, required to determine whether a finding which is based on no supportive evidence on the record can at all be sustained or considered binding upon the reference court. That apart, the question referred to this court is in our opinion wide enough to include within its scope the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere carried out on the common business premises of the assessees in which the party conducting the search had come across material showing large scale concealment of the true turn over. Super added to the said seizures was the statement of Shri J. S. Ramesh, representing the assessees in which the modus operandi adopted by the assessees for concealing the true turnover of the assessees was divulged. In his deposition, Shri Ramesh answered some of the questions put to him thus: "Question No. 32.-For the purpose of sale on each day, how many bill books you use for each of the firms? Answer.-One bill book for the accounted sales and the one for unaccounted sales ..... Question No. 50.-Under whose instructions the salesmen write the bills? And how will they know as to which particular bill book has to be used for the sale of a particular saree? Answer. -The procedure is the sale bills will be issued in respect of all the sale either accounted or unaccounted. After the morning hours, sales bills in respect of accounted sarees sold will be drawn afresh and only these sales will be entered in the daily sales ledger. This procedure is being adopted under my instructions." The su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 737 (Ker), the assessment of the assessee for the relevant assessment year was reopened and detailed enquiries pursued in respect of the same. The assessee, however, filed a revised return voluntarily on the basis whereof the Income-tax Officer completed the reassessment proceedings. A notice was thereafter issued to the assessee under section 271(1)(c) of the Income-tax Act, 1961, for concealment. The assessee contended that inasmuch as he had filed the revised return voluntarily and that the assessment had been completed on the basis of the same, the levy of penalty would be invalid as no concealment could be established with reference to the revised return. The Inspecting Assistant Commissioner rejected that contention, but the Tribunal cancelled the penalty holding that so long as the assessment proceedings were pending and investigations were being conducted by the Department, an assessee could rectify the return by filing a revised return under section 139(5) before the Department became aware of the particular activity in respect of which the income was concealed. On a reference a Division Bench of the High Court of Kerala held that the filing of a revised return voluntarily ..... X X X X Extracts X X X X X X X X Extracts X X X X
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