TMI Blog1975 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee at Rs. 2,88,683 at the rate of Rs. 19,245 per bus. Though the Appellate Assistant Commissioner held on the facts that the computation of income on the basis of the net wealth would not be correct having regard to the results admitted by other bus operators and the seating capacity of the buses plied by the assessee, he upheld the Income-tax Officer's estimate. For the assessment year 1958-59, corresponding to the previous year ending March 31, 1958, the assessee filed a return on December 17, 1958, showing a business loss of Rs. 37,779. This was filed by him on the basis of estimated increase in wealth during the relevant accounting year. For this year also, the assessee denied having maintained any accounts. The Income-tax Officer was of the view that the income had to be computed on an estimated basis having regard to the following factors, namely, the importance of the routes sanctioned to the assessee from a financial point of view, the passenger traffic that could normally be expected in the routes sanctioned to the assessee, the method adopted by the assessee to augment his revenue by resorting to the over-loading, etc., the seating capacity of buses plied by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Assistant Commissioner observed that it was doubtful if a charge of wanton concealment could be laid against the assessee. But, at the same time, he was satisfied that penalty was justified in a case like this because a random estimate, without any proper basis, may amount to furnishing of inaccurate particulars of income. He, however, reduced the penalty to Rs. 10,000 for each of the assessment years. On a further appeal, while disagreeing with the view of the Appellate Assistant Commissioner on the question whether there was any concealment of the income or whether it amounted only to furnishing of inaccurate particulars of income, the Tribunal held that in a case where the assessee has returned his income on the basis of an estimate, there was no question of his furnishing inaccurate particulars of his income and if it was satisfactorily proved that the assessee had deliberately under-estimated his income then it would amount to concealment of his income by the assessee. On the merits, the Tribunal also held that the charge of concealment had been amply proved by the facts and circumstances in this case. The Tribunal ultimately confirmed the penalty of Rs. 10,000. On the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961, and in view of the fact that the minimum penalty imposable exceeded a sum of rupees one thousand, he referred the case to the Inspecting Assistant Commissioner under section 234. The Inspecting Assistant Commissioner, after issuing fresh notices, held that the assessee had not proved that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on its part and accordingly imposed a penalty of Rs. 5,000 for each of the assessment years. On a further appeal, the Tribunal was of the view that mere absence of quantitative details and sales vouchers in majority of cases were not sufficient to justify the finding of any gross or wilful neglect on the part of the assessee. In that view, the Tribunal allowed the appeal and set aside the orders of penalty. The Explanation to section 271(1)(c), which was relied on by the Inspecting Assistant Commissioner in levying penalty, provided that where the total income returned by any person is less than eighty per cent. of the total income as assessed under section 143 or 144 or 147, such person shall unless he proves that the failure to return the correct income did not arise from any fraud o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot on account of any fraud or gross or wilful neglect on the part of the assessee. The burden which lies upon the assessee must be taken in such a case to be discharged so as to repel the applicability of the legal fiction enacted in the Explanation." Dealing with the argument of the revenue that even in the prior years the defects were pointed out, but the assessee persisted in not maintaining proper verificatory records and that this constituted gross or wilful neglect on the part of the assessee, the High Court observed--See [1974] 97 ITR 440, 448, 449 (Guj) : " It proceeds on the assumption that if accounts had been properly maintained by the assessee, they would have disclosed the total income as assessed and in that event there would have been no failure on the part of the assessee to return the total assessed income. This assumption is not well-founded. It is clear law that neglect postulates breach of duty to take care and there is clearly no duty on the assessee to maintain books of account, he runs the risk of best judgment assessment and in a best judgment assessment, it is quite possible that the total income assessed by the Income-tax Officer may be more than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urned was the correct income. Failure to return the total assessed income could not, therefore, be said to be due to non-maintenance of proper verificatory records by the assessee." We are unable to agree that this decision, in any way, helps the assessee in the present case in his contention that since he was not maintaining any account, he was estimating the income and that could not lead to any finding of wilful concealment or furnishing of inaccurate particulars. Under the provisions of the Act, an assessee is under an obligation to file a true return. Penalty for not filing a true return is provided under section 28 of the old Act. This is a case where there could be no doubt that there was an income. In fact, it was not the case of the asesssee that there was no income. Only the quantum of income was in dispute. The assessee had not been maintaining any account at all according to him. He was owning as many as 15 buses during both the relevant assessment years. The income, therefore, must have been considerable and in the usual course one would expect a bus operator of the status of the assessee to maintain accounts. The assessee did not even produce the trip sheets, invoi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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