1984 (6) TMI 107 - AT - Income Tax

Summary

Issues Involved:
1. Imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961.
2. Alleged concealment of income and furnishing of inaccurate particulars.
3. Non-production of purchase and sale vouchers, cash memos, and quantitative tally.
4. Non-filing of appeal against the assessment order.
5. Bona fide explanation and disclosure of facts by the assessee.

Issue-wise Detailed Analysis:

1. Imposition of Penalty under Section 271(1)(c):
The assessee, a registered firm dealing in Indian Made Foreign Liquor (IMFL), was penalized Rs. 1,24,721 under Section 271(1)(c) of the Income-tax Act, 1961. This penalty was confirmed by the Commissioner (Appeals) based on the findings of the Income Tax Officer (ITO) that there was a discrepancy between the assessed income and the returned income, suggesting concealment or furnishing of inaccurate particulars.

2. Alleged Concealment of Income and Furnishing of Inaccurate Particulars:
The ITO estimated the sales at Rs. 9 lakhs and the net profit at 5%, resulting in an assessed income of Rs. 45,000 against the declared loss of Rs. 1,70,421. The ITO initiated penalty proceedings, citing factors such as unentered Bill No. 438, non-production of vouchers, and discrepancies in the stock register. The Commissioner (Appeals) upheld the penalty, stating that the assessee accepted the assessed income, indicating suppression of sales and unreliable books of account.

3. Non-production of Purchase and Sale Vouchers, Cash Memos, and Quantitative Tally:
The assessee argued that the vouchers were with another partner who handled sales tax matters. The stock register was claimed to be properly maintained and verified by excise authorities, with no unaccounted stock found. The explanation for not producing vouchers was considered bona fide, as the assessee faced internal disputes and logistical issues.

4. Non-filing of Appeal Against the Assessment Order:
The ITO and Commissioner (Appeals) inferred guilt from the assessee's non-filing of an appeal against the assessment order. However, the Tribunal noted that non-filing of an appeal could be due to various reasons, such as the dissolution of the firm and minimal tax liability, and should not automatically imply concealment of income.

5. Bona Fide Explanation and Disclosure of Facts by the Assessee:
The Tribunal emphasized that the old Explanation to Section 271(1)(c) was not applicable post-1-4-1976, and the new Explanation required examining whether the assessee's explanation was bona fide and all material facts were disclosed. The Tribunal found that the assessee provided reasonable explanations for discrepancies and non-production of documents, and the explanation was deemed bona fide.

Conclusion:
The Tribunal concluded that the explanation offered by the assessee was bona fide and all relevant facts were disclosed. The presumption of concealment of income was rebutted, and the penalty could not be sustained. Consequently, the penalty of Rs. 1,24,721 was cancelled, and the appeal was allowed. The stay petition filed by the assessee was dismissed as infructuous.