TMI Blog1974 (8) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,490. In appeal, the estimate made by the Income-tax Officer was modified and the assessee's taxable income was determined at Rs. 59,050. As the total income returned by the assessee fell short of 80% of its assessed income, and minimum penalty leviable exceeded Rs. 1,000, the Income-tax Officer, after initiating penalty proceedings, referred the matter to the Inspecting Assistant Commissioner. The Inspecting Assistant Commissioner, after issuing a show cause notice to the petitioner and hearing it, concluded that the assessee had concealed and had furnished inaccurate particulars of its income and imposed a penalty of Rs. 5,742 under section 271 (1)(c) of the Income-tax Act. Being aggrieved, the assessee went up in appeal before the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the reference, it consolidated the two questions into one and after reframing the same, referred the following question for the opinion of this court : " Whether, on the facts and in the circumstances of the case, the assessee can be held to have concealed the particulars of its income and furnished inaccurate particulars thereof under the Explanation to section 271(1)(c) ? " We find that while imposing penalty under section 271(1)(c) the inspecting Assistant Commissioner observed thus : " As mentioned in the assessment order the assessee has not maintained proper stock account and, therefore, in view of the decision of the Supreme Court in S. N. Namasivayam Chettiar v. Commissioner of Income-tax, the accounts have been correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been levied purely on the basis of an addition made to the returned income by estimating sales and applying gross profit rate thereon, on the sole ground that the book results are not amenable to verification, no penalty under section 271(1)(c) could be imposed. It also did not apply its mind to the question regarding the applicability of the Explanation to section 271(1)(c) to the facts of the present case and, in case the Explanation to section 271(1)(c) was applicable, whether the assessee had discharged the burden of showing that he had either not acted fraudulently or that he was not grossly negligent in furnishing its return. We are unable to share the view of the Tribunal that in a case where the assessee's books are rejected and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c) did not apply to a case where the assessee had been assessed on the basis of additions made to its returned income by estimating its sales and applying a gross profit rate thereon. The Income-tax Appellate Tribunal should have disposed of the appeal only after considering whether in the circumstances of the case the Inspecting Assistant Commissioner was justified in coming to the conclusion that the assessee had concealed or furnished inaccurate particulars of its income, and in case it found that the material on the record was not sufficient to justify an inference that the assessee had concealed or furnished inaccurate particulars of its income, whether the Explanation to section 271(1)(c) was attracted to the facts of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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