TMI Blog1986 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... me to Rs. 3,04,259. Besides the above, Sushila Devi Kejriwal, the wife of Ram Saran Kejriwal, the partner of the assessee, purchased 500 shares of Chamurchi Tea Co. Ltd. on April 20, 1965. One Baitakhal Tea Co. Ltd., a company controlled by the Kejriwal family, also purchased 500 shares of Chamurchi Tea Co. Ltd. By reason of the aforesaid purchases, the assessee and the members of the Kejriwal family came to hold 5,129 shares out of the total 10,000 issued shares of Chamurchi Tea Co. Ltd. and thereby came to hold controlling interest in the said company. After the purchase of the said shares as aforesaid, seven of the existing directors of Chamurchi Tea Co. Ltd. resigned from the board of directors of the latter company during 1965 and in their place, Ram Saran Kejriwal, Shyam Saran Gupta, Nagarmal Kanodia, Narendra Kumar, Mrs. Sushila Devi Kejriwal, Mrs. Mridula Gupta and Somnath Beri, were appointed as directors of Chamurchi Tea Co. Ltd. The new directors all belonged to the Kejriwal group. This change of management was effected on and from May 1, 1965. It is also on record that the head office of Chamurchi Tea Co. Ltd. was shifted to the residence of Kejriwals at Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars when the break-up value was much higher. He found that this had been done only to create a loss. The further 67 shares purchased by the assessee subsequently at the rate of Rs. 60 per share were held to be forced as the assessee by that time had obtained control of Chamurchi Tea Co. Ltd. The Appellate Assistant Commissioner found that the shares of Chamurchi Tea Co. Ltd. were purchased by the assessee solely and exclusively for purposes of investment, in order to have complete control over the Chamurchi Tea Co. Ltd. He confirmed the assessment and dismissed the appeal of the assessee. Thereafter, the Inspecting Assistant Commissioner took up the penalty proceedings initiated by the Income-tax Officer . On the facts, the Inspecting Assistant Commissioner found that in filing its return, the assessee had concealed its income and had consciously furnished inaccurate particulars of income with pre-meditation and calculation. He held that the Explanation to section 271 (1)(c) of the Income-tax Act, 1961, was attracted on the facts and the decision of the Supreme Court in the case CIT v. Anwar Ali [1970] 76 ITR 696 did not apply on the facts. It was noted that the assessee did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Chamurchi Tea Co. Ltd. by way of investment. It was found further as a fact that the assessee did not have any intention to deal in the said shares. After acquisition of the said shares by the assessee, there was a change in the board of directors of Chamurchi Tea Co. Ltd. There was no evidence or claim that the assessee had subsequently converted the said shares as its stock-in-trade. On the other hand, the assessee did not sell the said shares to any outsider or in the market but the said shares were transferred or sold only to the members of the Kejriwal family who were in control of the assessee. The Tribunal found further that the, revaluation of the shares of Chamurchi Tea Co. Ltd. at the end of the assessment year 1966-67 was without any basis and such revaluation had no relationship even with the break-up value of the shares which was found to be about Rs. 168.40 per share. There was no material or evidence to show that the assessee was forced to transfer the said shares of Chamurchi Tea Co. Ltd. at extremely reduced prices. The Tribunal came to the conclusion that the assessee had a plan to acquire the controlling interest of Chamurchi Tea Co. Ltd. to implement which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions were by way of trade. (b) CIT v. Produce Exchange Corporation Ltd. [1963] 50 ITR 308 (Cal). The assessee, in this case, a company, carried on business, inter alia, as a dealer in shares. In the earlier assessment years, profits arising out of the assessee's dealing in shares had been brought to tax. In early 1947, the assessee purchased certain shares in a company and in the assessment year in question, sold the same to another company managed by the managing agents of the assessee at a loss. About a year after the sale, the purchaser company was appointed as the secretary of the company whose shares it had purchased. On these facts, it was held by the Income-tax Officer that the transaction by the assessee was in the nature of investment and disallowed the loss claimed by the assessee. On appeal, the Tribunal found as a fact that the assessee had been found to be dealer in shares in the earlier assessment years and its profits arising out of such dealings had been brought to tax. The Tribunal found further that in the transaction in issue, the shares had been purchased with borrowed money and both the purchase and sale of the said shares were at the prevailing market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e price. The Appellate Assistant Commissioner of Sales Tax made an order of assessment including the amount of freight in the taxable turnover of the assessee and levied tax on the same. The Appellate Assistant Commissioner also imposed penalty on the assessee on the ground that the assessee had failed to disclose in its return the amount of freight which formed part of the taxable turnover. By special leave, the assessee preferred appeal from the said order of assessment directly to the Supreme Court. The Supreme Court, following the decision in Hindustan Sugar Mills v. State of Rajasthan, AIR 1978 SC 1496, held that the amount of freight formed part of the sale price within the meaning of the Madhya Pradesh Sales Tax Act and the Central Sales Tax Act and that such freight had been rightly included in the taxable turnover of the assessee. The Supreme Court, however, held that by not including the amount of freight in its taxable turnover, the assessee could not be said to have filed a false return. The Supreme Court observed that a return could not be said to be false unless there was an element of deliberateness in it. Where the incorrectness of the return was found to be due to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal as fact that the assessee was proceeding under a plan to acquire shares of Chamurchi Tea Co. Ltd. by way of investment in order to obtain control of the latter company. The Tribunal further found that the assessee had consciously made a wrong claim of loss and deliberately reduced (its income) in its return for the assessment years in question. He submitted further that this finding has not been challenged by the assessee and has become final and, therefore, on the facts as found, the court should not interfere with the order of the Tribunal. It appears that the Inspecting Assistant Commissioner who passed the order of penalty held that, on the facts, section 271(1)(c) of the Income-tax Act read with the Explanation thereto was applicable. The Tribunal agreed with the order of the Inspecting Assistant Commissioner and held that the assessee was guilty of concealment under section 271 (1)(c) of the Act read with the Explanation thereto and was liable to the penalty imposed. It is not the case of the assessee that the Explanation to section 271(1)(c) of the Act does not apply to the facts. Under the said section 271(1)(c) and the Explanation thereto, a presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d shares and thereby deliberately reduced its income for the assessment year in question. Accordingly, the assessee was held to be guilty of concealment. The dealings and transactions by the assessee with the shares of Chamurchi Tea Co. Ltd., as found by the authorities below, have not been disputed by the assessee. The assessee did not adduce any further material or evidence in the penalty proceeding apart from those which was already on record in the assessment proceedings. None of the facts found by the Tribunal has been challenged by the assessee as perverse or unreasonable or based on no evidence. By reason of the aforesaid, in our view, there was sufficient material before the Tribunal to come to the conclusion that the assessee was guilty of deliberate concealment and furnishing of inaccurate particulars of income. We note that on the materials on record and on the facts as found, it might be possible to take a different view but, exercising an advisory jurisdiction, we are unable to treat this reference as an appeal and come to a conclusion or arrive at a finding different from that of the Tribunal. The contention of the assessee that it had disclosed all primary f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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