9911796707
TMI Blog1979 (10) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,457 being the income of connected firm M/s. Kamal Prakashan which was considered to be a branch of the assessee. On appeal this amount of Rs. 22,457 was deleted but the balance of Rs. 25,000 was confirmed by the AAC as well as by a Bench of this Tribunal. The ITO, therefore, initiated penalty proceedings under s. 271(1)(C) and referred the matter to the IAC. 2. The contention of the assessee was that the assessment in this case had been made ex parte and the income has been simply estimated on conjectures. There was no base for this estimate. The assessee of course could not get relief for want of proper account books but it did not mean that the Deptt. had able in establishing the concealment of the particulars of income by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee in the three years aggregated to Rs. 14,200 only. One thing, therefore, was clear that the assessee's capital was very much disproportionate to his past assessee income and looking to the disproportion the sales were correctly estimated at Rs. 1 lac in the asst yr. 1965-66. In the year 1965-66 the sales were estimated at Rs. 1,25,000 against Rs. 84,568 shown by the assessee. In the year 1966-67 the estimate was at Rs. 1,30,000 against Rs. 33,581 shown by him. All these assessments were confirmed by the Tribunal as the assessee could not explain the reasons for low sales in reference to the closing stock. This was not a case where the books of accounts were maintained and rejected for technical reasons and the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any books of accounts and his estimate was based on the fact that most of the stock of books lying with him had become outdated and obsolete. It was also argued that no fresh purchases were made by him. This Bench of course rejected his contention but the main reason for the same was that for the earlier years also the assessee's sales had been estimated at Rs. 1 lac, Rs. 1,25,000 and Rs. 1,30,000 respectively on which a net profit rate of 20 per cent was applied and these assessments were substantially upheld in appeals. Similarly, our conclusion was supported by the fact that the assessee's income for the year 1964-65 upheld at Rs. 18,000 and for the year 1965-66 at Rs. 24,750. Therefore, the estimate of income determined at Rs. 25,000 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Expln. to the s. 271(1)(C) where the assessee is required to prove that the failure to return the correct income did not arise from any fraud or gross or wilful neglect on his part. Ordinarily there cannot be any direct evidence to prove such a fact and all that the assessee can do is to place the materials or primary facts which in all reasonable probabilities would show that he was not guilty of fraud or gross or wilful neglect. In this case the assessee had filed a return of income at Rs. 29,508. The income ultimately assessed was to Rs. 80,586. Consequently, the ITC had imposed a penalty of Rs. 6000 by invoking the law engrafted in the Expln. to cl. (C) of s. 271(1) of the IT Act. It was held that the denial of the assessee at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. The additions were sustained by the AAC but the unexplained deposit was deleted and the firm given the benefit of telescoping. The IAC imposed penalty on the ground that the request for telescoping amounted to admission of the firm that it had made substantial profits in its trading account. It was held that the request for telescoping was only to buy peace and did not amount to admission of concealment of income and the levy of penalty was not justified. 5. In view of all the above circumstances and a large number of other authorities which have been referred to in these two cases, we are of the opinion that it would not be safe to uphold the penalty imposed upon the assessee in the present case which is accordingly deleted. 6. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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