1976 (9) TMI 67 - AT - Income Tax

Issues Involved:
1. Levy of Penalty under Section 271(1)(c) of the Income-tax Act, 1961.
2. Validity of Penalty Proceedings Initiated by the Income-tax Officer.
3. Whether the Assessee Furnished Inaccurate Particulars or Concealed Income.
4. Quantum of Concealed Income and Appropriate Penalty.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c) of the Income-tax Act, 1961:
The main issue in this appeal concerns the levy of a penalty of Rs. 52,000 on the assessee under Section 271(1)(c) for concealing particulars of income. The assessee, an unregistered firm engaged in the manufacture and sale of cement products, declared a gross profit of Rs. 69,434 on total sales of Rs. 2,31,448, resulting in nil income after adjustments. However, discrepancies were found in the sales records during the assessment, leading to the imposition of the penalty.

2. Validity of Penalty Proceedings Initiated by the Income-tax Officer:
The assessee contended that the penalty proceedings initiated by the Income-tax Officer were invalid as the officer did not quantify the amount of income considered concealed. However, it was argued by the Departmental Representative that the total income returned by the assessee was less than 80% of the assessed income, invoking the Explanation to Section 271(1)(c). The Tribunal found force in the Department's submission, noting that there is no statutory requirement for the Income-tax Officer to specify the amount of concealed income in the penalty initiation order. It was sufficient if the assessment order reasonably inferred the concealed income amount.

3. Whether the Assessee Furnished Inaccurate Particulars or Concealed Income:
The Tribunal examined whether the assessee furnished inaccurate particulars or concealed income. The assessee argued that any discrepancies were due to the seizure of its books by the Commercial Taxes Department and that there was no deliberate intent to furnish inaccurate particulars. However, the Tribunal found that the assessee had suppressed sales, as evidenced by discrepancies between the rough cash book and the regular cash book. The Tribunal concluded that the charge of concealment of income was maintainable and that the penalty order was not invalid for failing to specify whether the penalty was for furnishing inaccurate particulars or for concealment.

4. Quantum of Concealed Income and Appropriate Penalty:
The Tribunal considered the quantum of concealed income and the appropriate penalty. The Income-tax Officer had estimated the assessee's income at Rs. 3,50,000, applying a 50% gross profit rate, resulting in an addition of Rs. 1,05,566 to the gross profit. The Appellate Assistant Commissioner reduced the gross profit rate to 40% on estimated sales of Rs. 3,10,000, giving relief of Rs. 51,000. The Tribunal further reduced the gross profit rate to 36% on estimated sales of Rs. 3,00,000, sustaining an addition of Rs. 38,566. The Tribunal found that the assessee's explanation regarding the suppressed sales was insufficient and that the charge of concealment to the extent of Rs. 38,566 was proved. Consequently, the Tribunal reduced the penalty to Rs. 38,570, considering it just and appropriate.

Conclusion:
The appeal was allowed to the extent of reducing the penalty to Rs. 38,570.

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