TMI Blog1983 (11) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in its books of account as if art-silk yarn was imported and used in the manufacture of silk cloth and the silk cloth so manufactured was also sold and estimating the income derived by the assessee by the sale of the licences after allowing a discount of 50 per cent., determined the total income at Rs. 4,02,279. Action for the levy of penalty under s. 271(1)(c) of the Act was also initiated for the alleged concealment of income and the matter was referred to the IAC, as the minimum penalty imposable exceeded Rs. 1,000. Aggrieved by the assessment, the assessee preferred an appeal contending that the import licences obtained by it had been sold at rates 15 per cent. to 20 per cent. lesser than the Bombay market rates, that the estimate of the ITO of the income got by the sale of the licences was excessive and that the allowance of 50 per cent. discount on the value of the licence was meagre. However, by its letter addressed on December 28, 1970 to the AAC, the assessee agreed to the disposal of the appeal after allowing 25 per cent. of the export invoice value towards the loss in the cost of goods exported and 25 per cent. of the export invoice towards repatriation loss in repat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and that the assessee had also disclosed voluntarily the full particulars in its petition dated March 9, 1966, before the Commissioner and, therefore, the principle in CIT v. Ramdas Pharmacy [1970] 77 ITR 276 (Mad) would apply. Ultimately, the Tribunal concluded that the charge of concealment of income by the assessee cannot be sustained and, in that view, the appeal was allowed and the levy of penalty was cancelled. Aggrieved by this, the Revenue has obtained a reference for the opinion of this court on the following question of law: Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in cancelling the penalty of Rs. 20,000 levied by the Inspecting Assistant Commissioner under section 271(1)(c) of the Income-tax Act, 1961 ?" The learned counsel for the Revenue contended that the Tribunal misdirected itself in law into thinking that the assessee had filed a revised return and, on such misdirection, had erroneously applied the decision in CIT v. Ramdas Pharmacy [1970] 77 ITR 276 (Mad), though the order of the Tribunal also disclosed that it Was aware of the fact that the assessee had not filed a revised return and this, according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by it earlier, viz., Rs. 58,600, would nevertheless be the same. It is not as if the entries in the books of account were genuine at the time of filing of the return on January 16, 1965, but subsequently and suddenly were discovered to be bogus on March 9, 1966, when the petition under s. 271(4A) of the Act was filed. The entries in the accounts were bogus right through, except that the assessee admitted them to be so only later. Thus, the contents of the petition filed by the assessee under s. 271(4A) of the Act clearly established that the assessee, even at the time of furnishing the return based upon the entries in the books of account, was fully aware that the entries were not real, but a made up one and the particulars of income furnished in the return on the basis of those entries were not true, and, therefore, the return was not true return in that sense. Besides, even in the course of the petition filed by the assessee under s. 271(4A) of the Act, the assessee had reiterated that the return of income filed earlier by it disclosing Rs. 58,600 would hold good even on the admission that the account entries do not reflect the real state of affairs. There was no attempt on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of entries in accounts false to its knowledge and this would amount to furnishing of inaccurate particulars of income as well. Considering the contents of the petition admittedly filed under s. 271(4A) of the Act by the assessee, we are of the opinion that this case is one of a self-confessed furnishing of inadequate particulars and concealment by the assessee. On the facts and circumstances of this case, therefore, we have no hesitation in holding that the requirements of s. 271(1)(c) of the Act are fulfilled. The learned counsel for the Revenue also relied upon the Explanation to s. 271(1)(c) of the Act to contend that the income returned by the assessee in this case was Rs. 58,600, while it was assessed at Rs. 1,56,102 and the assessee had not established that its failure to return its correct income did not arise from any fraud or neglect on its part and, therefore, the assessee should be deemed to have concealed particulars of its income or furnished inaccurate particulars for purposes of cl. (c) of s. 27 l(1) of the Act. The learned counsel for the assessee, however, attempted to submit that the Explanation to s. 271(1)(c) of the Act was never invoked at all and cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and the incorrectness of the particulars of the income even at the time of the filing of the original return, there was no question of a subsequent discovery of an omission in the return already filed and the filing of a second return or a petition under s. 271(4A) of the Act would not be germane to a consideration of the scope of s. 271(1)(c) of the Act and that the levy of penalty on an assessee, who had intentionally or deliberately concealed particulars of income in the first and second return, would be justified. By the very petition filed by the assessee in this case under s. 271(4A) of the Act, it accepted that it is aware that the entries in the books of account on the basis of which particulars of income had been furnished earlier, did not reflect the correct position. That would mean that the assessee was all the while aware that the entries in the books of account were not true, but nevertheless the assessee furnished its return of income on the basis of those entries. There was no attempt by the assessee to make good its omissions in this regard prior to the completion of the assessment by filing another return or at least coming out with a full disclosure of all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to what it had furnished in its return of income in the reassessment proceedings, or even in its revised return in the same proceedings, by way of estimate of the profits on sale of import licences. On the contrary, the penalty was directed against the assessee for its having suppressed and concealed its income in the original return which it had filed on October 15, 1963, wherein it had disclosed only an income of Rs. 47,086 making it appear that that income was derived by it from a business of manufacturing finished textile goods from out of art-silk yarn imported from abroad by utilisation of import permits. It was this original return filed by the assessee in the original assessment proceedings which was pinpointed in the order of penalty passed by the IAC. He had clearly referred to the assessee's subsequent repudiation of its accounts and its original return. He had referred to the assessee's disclosure petition and its clear admission both in that petition and in the course of the reassessment proceedings that its original return as well as the accounts on which it was based did not disclose the true state of affairs. It is this self-confessed concealment on the part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
