1985 (10) TMI 50 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Tribunal was right in departing from the finding in the assessment appeal and holding that there was no concrete finding of concealment which could be said to be within the knowledge of the assessee-company and that the estimate in respect of the concealed income is a matter of opinion and not attributable to fraud or wilful neglect of the assessee.
2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no penalty was leviable u/s 271(1)(c) of the Income-tax Act, 1961, for the assessment years 1950-51 to 1953-54.

Summary:

Issue 1:
The Tribunal departed from its findings in the assessment proceedings, where it was categorically held that the assessee had concealed income and maintained two sets of accounts. The Tribunal in penalty proceedings inferred that because the income was computed on an optimum receipt basis, it impliedly did not place reliance on the diaries. However, the High Court found this departure erroneous, emphasizing that the Tribunal had accepted the findings of the Income-tax Officer regarding the concealed income and the duplicate sets of accounts. The High Court reiterated that the entirety of circumstances must point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of its income or deliberately furnished inaccurate particulars. The High Court concluded that the Tribunal's decision to the contrary was illegal and erroneous.

Issue 2:
For the assessment years 1950-51, 1951-52, and 1953-54, the High Court held that the Tribunal erred in law in holding that no penalty is leviable u/s 271(1)(c) of the Act. Regarding the assessment year 1952-53, the High Court found that the Tribunal seriously erred in law by stating that the onus on the assessee stood discharged merely because the income was estimated on an optimum receipt basis. The High Court referred to the Full Bench decision in Vishwakarma Industries v. CIT [1982] 135 ITR 652, which established that presumptions arise against the assessee under the Explanation to section 271(1)(c), and it is for the assessee to rebut those presumptions. Since the presumptions were not rebutted, the Tribunal was in error in not levying the penalty.

Conclusion:
The High Court answered both questions in favor of the Department and against the assessee, holding that the Tribunal erred in its findings and that penalties were indeed leviable for the assessment years in question. The reference was disposed of, and the assessee was ordered to pay the costs of the Department.