9911796707
TMI Blog1977 (5) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... deed of dissolution was executed on 6th Sep, 19971 evidencing the dissolution of the firm on 31st Aug, 1971. For the assessment year 1972-73 the firm filed its return of income declaring the income for the period 11th Aug, 1970 to 3rd July, 1971 on the ground that the books were closed on the latter date. The Income-tax Officer found that in between the closure of the accounts on 3rd July, 1971 and the dissolution of the firm on 31st Aug, 1971 the assessee had received a sum of Rs.. 52,619 by way of rebate from its principals M/s. Alkali and Chemical Corporation of India Ltd., Madras. This represented the rebate which the assessee was entitled to receive on turnover of paints sold during the period 1st Oct, 1970 to 30th June, 1971. Actually the total rebate to which the assessee was entitled was Rs. 70,882 of which it had already accounted for in its books before 3rd July, 1971 to the tune of Rs. 18,263 being the total interim payment received. According to the assessee the balance of Rs. 52,619 could not be assessed in the assessment year 1972-73 as it was received subsequent to the previous year ended 3rd July, 1971 on which date the books were closed. The Income-tax Officer did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by 30th June, 1971 and the rebate was also referred to by the said company in their letter dated 15th July, 1971 addressed to the assessee. In other words, according to the Inspecting Asstt. Commissioner, to the assessee knew well before the dissolution of the firm on 31st Aug, 1971 and, therefore, it was rightly assessable to Income-tax for the assessment year 1972-73 and by closing the accounts 3rd July, 1971 the assessee had tried to evade tax on this amount. In this view there was no reason for the assessee to close the books on 3rd July, 1971 except to evade tax on the sum of Rs. 52,619 and, therefore, it was guilty of concealment of income to that extent and was liable to penalty under s. 271(1)(c) of the Act. He accordingly levied penalty of Rs. 52,620. 4. Before us Shri M.S. Sastry, the learned representative of the assessee has submitted that due to differences among the partners which fact is evidenced by the correspondence between the assessee-firm and M/s. Alkali and Chemical Corporation of India Ltd., Madras, the assessee suspended the business on 9th June, 1971 itself, that from that date one of the partners, T. Rama Rao left the firm and the business was taken ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to agree with the Revenue s contention. We find from the past record that the assessee had been accountings for the rebate received from M/s. Alkali and Chemical Corporation of India Ltd., Madras and other manufacturers for whom it was acting as stockists only in the accounting year in which the relevant credit notes were received from the companies. In so far as the sum of Rs. 52,619 was concerned, though the credit note was dated 30th June, 1971, it was received only on 13th July, 1971 that is, after the closure of the accounts on 3rd July, 1971. The assessee, therefore, did not account for the said sum in the accounts made up for period ending 3rd July, 1971. The assessee cannot certainly be accused of possessing the knowledge of the rebate on 30th June, 1971 itself and not including the same deliberately in the books of account that were closed on 3rd July, 1971. The question that is whether the assessee was prompted by a motive to evade tax by closing the books on 3rd July, 1971 instead of 31st Aug, 1971 when the firm was actually dissolved as per the dissolution deed. It must be noted here that the firm stopped its business activities completely on 9th June, 1971 itself due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1972-73. It was because that the date 3rd July, 1971 on which the books were closed was neither the date on which the firm stopped its business activities and handed over the business with all assets and liabilities to the new firm of three partners nor the date on which the firm was treated as dissolved by the dissolution deed, the Income-tax Officer was not prepared to accept the previous year for the assessment year 1972-73 as the year ending on 31st Aug, 1971. In that view of the matter, the Income-tax Officer was quite justified in including the sum of Rs. 52,619 in the assessment for 1972-73 and the same was upheld in appeal by the Income-tax Appellate Tribunal. But does it mean that the assessee was guilty of concealment of income of furnishing of inaccurate particulars so as to attract the provisions of s. 271 (1)(c) of the Act?. We do not think so. Even assuming for the sake of argument that the assessee intentionally and deliberately closed its books of account for this year on 3rd July, 1971 in order to avoid payment of tax on the sum of Rs. 52,619, there was neither concealment of income nor furnishing of inaccurate particulars of income so as to attract the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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