TMI Blog1992 (1) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961 (hereinafter referred to as " the Act " ), in the premises of the assessee-firm and, during that process, found excess stock of the value of Rs. 23,445 lying there and held that the assessee had, as such, suppressed the purchases of stock of cloth of the aforesaid value and had made investment in purchases from income from undisclosed sources. The Income-tax Officer further prepared an inventory of the closing stock. It was further alleged in the complaint that, in the return for the year 1978-79, a total income of Rs. 29,630 was declared by the firm. With these facts before the income-tax authorities, an opportunity was given to the firm and its partners to reconcile the difference between the closing stock found on physical ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the provisions of the Act and the rules framed thereunder and, as such, the accused deliberately furnished an untrue verification and had delivered a false account and thus an offence under sections 277 and 276C has been committed by the partnership (registered firm) by intentionally fabricating false evidence in the shape of bogus account books for being used in the income-tax assessment proceedings. In the complaint, it is also stated that offences under sections 193 and 196, IPC, are also made out. The complaint having been filed by an Income-tax Officer in his official capacity, his statement was not recorded and the accused were summoned. On putting in appearance before the court, the accused moved an application on the ground th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 134 ITR 8 (P H) and, accordingly, the complaint was ordered to be dismissed. Against this order of dismissal dated May 22, 1987 of the trial Magistrate, the complaint filed an appeal in this court which was admitted by a Division Bench of this court, vide order dated December 11, 1987. Now, vide this judgment, the appeal is being disposed of finally. We have heard learned counsel for the parties and perused the records as well. Mr. R. P. Sawhney, counsel for the appellant, has not disputed the finality of the order passed by the Appellate Authority, Chandigarh, dated April 29, 1986, yet the sole argument raised by him is that the said order would not operate as a bar to the criminal prosecution of the accused and, in support of this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is pending." These observations were made by the Supreme Court while rejecting the plea of the assessee holding that mere pendency of proceedings before the authorities does not bar the pendency of criminal proceedings in a criminal court. An assessee with mere expectation of success in some proceedings or any appeal or reference under the Act cannot come in the way of criminal proceedings under sections 276C and 277 of the Act. All the same, it was held that the criminal court has to give due regard to the result of any proceedings under the Act which has a bearing on the question in issue and, in a appropriate case, it may drop the proceedings in the light of an order passed under the Act. These observations of the Supreme Court are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of goods sold there against would work out to Rs. 4,65,968 as against the goods available for sale Of Rs. 5,26,897. The difference of Rs. 60,929 will be the closing stock. The contention of learned counsel for the assessee was that the Income-tax Officer had worked out the stock on the basis that the assessee had earned 6 per cent. gross profit throughout the period. He submitted that it is common knowledge that, in trade, there are always fluctuations in the margin of profit. Sometimes profit will be more and at other times there may be loss or low profits or profits lower than the overall gross profit throughout the period. He, therefore, urged that the application of 6 per cent. gross profit rate throughout the year would not give th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year. There are bound to be fluctuations. Similarly, the inventory of the goods pre pared by the survey team does not indicate the basis as to whether it is based on purchase vouchers or the market price. The learned Departmental representative was unable to state at the time of hearing of the appeal about the basis of value adopted. We, therefore, hold that the explanation furnished by the assessee was bona fide and, taking into consideration the proviso below Explanation 1 to section 271(1)(c) of the Act, in our opinion, no penalty was exigible. The penalty imposed is, therefore, cancelled. 6. In the result, the appeal is allowed. In view of the observations recorded by the Appellate Tribunal, under the Act, the trial court rightly p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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