1980 (3) TMI 161 - AT - Income Tax

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Levy of penalty under Section 271(1)(c) of the IT Act, 1961.
3. Jurisdiction of the IAC to levy penalty.
4. Sufficiency of evidence and opportunity for cross-examination.
5. Nature of the additions as estimated or specific.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The appeal was filed with a delay of 61 days due to the assessee being misled by the demand notice which incorrectly mentioned the appellate authority. The Tribunal found that the assessee acted with due diligence and was misled by the notice, thus condoning the delay and admitting the appeal.

2. Levy of Penalty under Section 271(1)(c) of the IT Act, 1961:
The assessee, a partnership firm, had declared an income which was rejected by the ITO, who made significant additions for suppressed turnover and unexplained credits. The ITO's assessment was based on discrepancies between the assessee's accounts and those of M/s. Tejappa & Sons, and unaccounted deposits in bank accounts linked to the firm. The AAC reduced the additions but still found evidence of manipulation. The Tribunal upheld the AAC's findings and confirmed the penalty, noting that the suppression of purchases and sales, non-recording of transactions, and unexplained cash credits were established facts.

3. Jurisdiction of the IAC to Levy Penalty:
The assessee contended that the IAC lost jurisdiction due to the amendment of Section 274(2) of the IT Act. However, the Tribunal held that the jurisdiction, once vested, did not get divested by the amendment, citing the General Clauses Act, 1897, and previous Tribunal decisions in the same assessee's case. The Tribunal also referenced the Punjab & Haryana High Court's decision in Raman Industries, supporting the view that the IAC retained jurisdiction.

4. Sufficiency of Evidence and Opportunity for Cross-Examination:
The assessee argued that the addition was based on estimates and that they were not given a proper opportunity to cross-examine M/s. Tejappa & Sons. The Tribunal found that the assessee had the opportunity to cross-examine Veerabadrappa of M/s. Tejappa & Sons, who confirmed the suppression of transactions. The Tribunal noted that the modus operandi of under-invoicing was clearly established and that the assessee's explanations were insufficient.

5. Nature of the Additions as Estimated or Specific:
The Tribunal clarified that the additions were not purely estimates but were based on concrete evidence of suppressed transactions and unexplained credits. The Tribunal emphasized that the suppression of purchases and sales, and the non-recording of bank transactions, were established facts. The Tribunal rejected the argument that the penalty could not be imposed in cases of estimated income, distinguishing the facts of this case from those in CIT vs. Gordhandas Moolchand.

Conclusion:
The Tribunal dismissed the appeal, confirming the penalty imposed by the IAC. The judgment highlighted the systematic suppression of income by the assessee, the proper jurisdiction of the IAC, and the sufficiency of evidence supporting the penalty.