1991 (4) TMI 164 - AT - Income Tax

Issues Involved:
1. Sustaining penalty under Section 271(1)(c) for specific additions/disallowances.
2. Bona fides of the assessee in showing accrued liabilities.
3. Applicability of Section 271(1)(c) and its Explanation.
4. Justification and quantum of penalty imposed.

Detailed Analysis:

1. Sustaining Penalty under Section 271(1)(c) for Specific Additions/Disallowances:
The assessee contested the penalty under Section 271(1)(c) for the following items:
- Rs. 2,51,086 loss in English wine shop.
- Rs. 33,500 compensation payable to contractors.
- Rs. 66,865 interest payable on security.

The Income-tax Officer (ITO) found discrepancies in the assessee's declared income and the profit detected in the seized books of account. The ITO did not accept the explanations for the losses and disallowed the deductions, leading to the imposition of a penalty.

2. Bona Fides of the Assessee in Showing Accrued Liabilities:
The assessee argued that the liabilities were shown in good faith in the profit and loss statement submitted with their return of income. The assessee claimed that the expenses were genuine and that the IAC had allowed a bonus amount of Rs. 1,15,000, indicating the bona fides of their claims.

3. Applicability of Section 271(1)(c) and Its Explanation:
The CIT(A) and the Tribunal discussed the applicability of Section 271(1)(c) and its Explanation. The Tribunal referred to the case law, including:
- Sir Shadi Lal Sugar & General Mills Ltd. vs. CIT, where the Supreme Court held that mere acceptance of certain amounts as taxable does not imply deliberate furnishing of inaccurate particulars.
- Kedar Nath Sanwal Das vs. CIT and CIT vs. Nathu Lal Agarwal & Sons, where the courts held that the burden of proof shifts to the assessee to rebut the presumptions of concealment and furnishing inaccurate particulars.

The Tribunal concluded that the assessee failed to provide acceptable explanations for the discrepancies, and the presumptions of concealment under the Explanation to Section 271(1)(c) were not rebutted.

4. Justification and Quantum of Penalty Imposed:
The Tribunal upheld the CIT(A)'s decision to impose a penalty at the minimum rate of 100% of the tax sought to be avoided. The CIT(A) found that the explanations for the following items were not bona fide:
- Loss in English wine shop: The assessee failed to produce a supplementary deed to prove that the business was carried on by the firm as per the partnership deed.
- Compensation payable to contractors: No evidence was provided to establish this liability.
- Interest payable on security: This liability did not exist at the time of filing the return.

The CIT(A) accepted the assessee's claim for the penalty payable to the Excise Department and the transfer to the general reserve, excluding these from the penalty. The final penalty was calculated on the concealed amount of Rs. 3,51,451.

Conclusion:
The Tribunal affirmed the CIT(A)'s order, finding no factual or legal infirmity. The penalty under Section 271(1)(c) was upheld for the amount of Rs. 3,51,451, and the appeal was dismissed.

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