9911796707
TMI Blog1991 (11) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... han and that, further, she had concealed a net profit of Rs. 30,308 on sales of Rs. 92,146 in the business carried on by her in the name of her minor daughter under the name and style of M/s. Sunita Prakashan and that she had also furnished inaccurate particulars of her income. He, therefore, levied a penalty of Rs. 63,000 which was equal to 100 per cent of the concealed income. For this, the Assistant Commissioner relied on the findings of the first appellate authority in the quantum appeal and rejected the assessee's plea that there was no concealment of income nor any furnishing of inaccurate particulars of such income by her to justify the imposition of a penalty, in response to the show-cause notice issued against such levy of penalty. 4. The Commissioner of Income-tax(Appeals) to whom the assessee appealed against the levy of penalty, did not agree with the assessee's contentions. She held that as a result of search and seizure operations conducted in the residence as well as the business premises of the assessee, incriminating documents were found to show suppression of sales in her own business and also in the business done in the name of her minor daughter. For this, she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of section 271(1)(c) of the Act in respect of the said addition. Regarding the other addition of Rs. 19,532, the learned Chartered Accountant submitted that there could be no penalty under section 271(1)(c) of the Act having regard to the fact that the assessee had placed all the fact relating to her despatches of books to various schools throughout the country and she had also properly accounted for the sales as and when she received the amounts from the said schools in subsequent years. The learned Chartered Accountant pointed out that the appellant was publishing books for the nursery class children, that these books were not prescribed by any Goverment authorities nor approved by any Board of Education, and that the assessee had been accounting for the sales of these books as and when she received the sale proceeds from the various schools to whom she had supplied the books from time to time as and when they prescribed the books in their schools. He pointed out that this method of accounting for the sales on actual receipt basis was consistently followed by the appellant right from the assessment year 1961-62 when she commenced this business in her own name during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. 7. I have carefully considered the rival submissions of parties in the light of the materials placed before me. 8. I find that the appellant is publishing books for children studying in nursery class. She has been in this line of business from the year 1960 relevant for the assessment year 1961-62. There is no dispute that the books published by the appellant are not approved by the Government or educational Boards or educational departments and that there is no element of compulsion for schools to prescribe the books published by the assessee. The assessee's method of effecting sales is to send her books through her employees or salesmen to various schools and leave them with the Principals or agents of the schools. According to the assessee, these books delivered to these schools were recorded in the memoranda register, but since no sales had taken place they were not recorded in the sales account. The assessee took these sales into account only when she received cash from the Principals or agents of the schools when she prepared regular cash memos and entered the same in her sales account. This, according to her, is the regular method of accounting followed by her. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipals of the Schools, the assessee is required to account for the same in its accounts as closing stock. Though the assessee maintained that that was being done on nominal value, the same remained unsubstantiated. In view of this position I hold that the revenue was justified in not accepting his method followed by the assessee. In order that there is no double taxation of this income I would direct that the income offered by the assessee in subsequent assessment years on receipt basis from the despatches made in accounting period relevant to August 1974-75 will be excluded by the Assessing Officer from the assessable income. The receipts for despatches of earlier years in the current year as well as in the subsequent years will, however, be taken into consideration, while computing the income of the assessee. The ld. counsel for the assessee had also contended that the rate of 50% applied was without any basis particularly when the Assessing Officer himself has mentioned in the order that the assessee was showing profit of 31 %. I find force in this submission on behalf of the assessee. It would meet the ends of justice if net profit of 20% is considered reasonable on such despat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid principles laid down by the Supreme Court, which are applicable to the facts of the present case, it is clear that the assessee had discharged her burden of proof to rebut and displace the presumption raised by the Explanation to section 271(1)(c) of the Act. A perusal of paragraph 8 of the order of the Tribunal would show that the addition that was ultimately sustained by the Tribunal, was only to the closing stock of the assessee as the Tribunal was of the view that the goods that were sent on approval or consignment basis to the Principals of the schools should have been included in the accounts of the assessee as closing stock. The assessee's claim before the Tribunal was that such closing stock was being valued on a nominal basis, but as it remained unsubstantiated the Tribunal did not accept the said contention. No doubt, these findings of the Tribunal would certainly constitute good evidence in favour of the Revenue and against the assessee. But these findings are, however, not conclusive so far as penalty proceedings under section 271(1)(c) of the Act are concerned. This position is also well settled by the decisions of the Supreme Court vide CIT v. Anwar Ali [ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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