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TMI Blog1976 (9) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... allegedly on the basis of vouchers for the subsequent period of the relevant assessment year. The assessee furnished its income in the return, allegedly on the basis of information derived by it from its regular books of account for the period upto June, 1969 and from the said registers for the subsequent period. The assessee had attached a letter along with its return wherein it was stated that since the books of account of the assessee could not be completed, there might be some variations in the profit as shown in the return and the assessee should not be held guilty of the charge of concealment of the particulars of income for that reason. The Income-tax Officer in the assessment proceedings found that the sales to the extent of Rs. 37,976 which were recorded in the rough cash book of the assessee, did not find place in the regular cash book of the assessee for the period upto May or June, 1969. He came to the conclusion that the assessee had suppressed these sales of Rs. 37,976 as was specifically detected. He also took the view that the assessee had not recorded full sales in his register for the subsequent period of the relevant assessment year. The Income-tax Officer thus e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. He accordingly levied a penalty of Rs. 52,000 on the assessee. 6. We have heard Shri Garg, the learned representative of the assessee, and Shri Bhatia, the learned departmental representative. Shri Garg raised some legal contentions before us. He, first of all, submitted that the penalty action was commenced by the Income-tax officer on, 26th March, 1973 when s. 271(2) stood amended with effect from 1st April, 1971 and that according to it, the Income-tax Officer was to refer the penalty proceedings to the Inspecting Assistant Commissioner only if he was satisfied that the amount of income in respect of which the particulars had been concealed or inaccurate particulars furnished exceeded a sum of Rs. 25,000. According to the learned counsel, it was the duty of the Income-tax Officer to have quantified the amount of income in respect of which he was satisfied that the assessee had concealed the particulars of income. It was stated that there is nothing in the order of the Income-tax Officer to indicate as to the extent of the amount of income considered by him to have been concealed by the assessee and that, therefore, there was no basis for the Income-tax Officer to say th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer to specifically state in the order initiating penalty action as to the amount of income about which the Income-tax Officer is prima facie satisfied as representing the concealed income of the assessee. The initiation of penalty action under s. 271(1)(c) shall be valid if from a reading of the assessment order of the Income-tax Officer, it can reasonably be inferred as to the extent of the amount of income about the concealment of which the Income-tax Officer s satisfaction can be gathered to have been reached. We are of the view that in a case to which Explanation to s. 271(1)(c) applies, if the Income-tax Officer initiates penalty action, he shall be deemed to have been satisfied before initiating penalty action that the entire difference between the assessed and the returned income represented the concealed income of the assessee unless the Income-tax Officer otherwise indicates, on the records of the case including the assessment order, in his order initiating penalty action. Thus, on his footing alone, it could reasonably be inferred that the Income-tax Officer s prima facie satisfaction was reached with regard to the entire difference of the assessed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he particulars by the assessee. It was further stated that the Income-tax Officer in his order initiating penalty action stated that the assessee had furnished inaccurate particulars of income for which penalty action under s. 271(1) (c) had already been initiated. It was contended that the penalty order of the Inspecting Assistant Commissioner could be construed to mean that the Inspecting Assistant Commissioner levied the impugned penalty on the assessee for the alleged concealment of particulars of income, which according to the learned representative, under the circumstances of the case, was not legally permissible and the penalty order was thus stated to be bad for this reason. 9. We do not find any merit in the aforesaid contention. We are of the considered view that in a case in which an assessee declares less sales than they are determined on assessment and or the assessee shows less gross profit than what is determined at assessment, the assessee shall be liable to the charge of concealment of the particulars of income that is that in such a case a charge of concealment of the particulars of income to the extent addition to the trading results, under such circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee submitted its letter dated 9th January, 1973 along with its return wherein it had stated that as the books of the assessee were in the possession of the Income-tax Officer, the closing stock could not be ascertained and that the assessee had estimated the gross profit by applying the gross profit rate of 30% which prevailed in the prior years on the sales as the assessee was able to ascertain from the books of account and that, under the circumstances, if there was any enhancement of income, then it would not be a case of concealment of income on the part of the assessee. Sri. Garg submitted that the assessee had thus disclosed correct state of affairs to the Income-tax Officer and the under-statement of the sales by the assessee, if any, was not deliberate or disguised. It was lastly contended by Sri Garg that as per the Income-tax Officer, the specifically detected suppressed sales of the assessee were only to the extent of Rs. 37,976 or say Rs. 38,000 (on rounding up) and that there was no material on record of the Income-tax Officer or the Inspecting Assistant Commissioner to show that the assessee had effected further unaccounted for sales and that thus the charge of conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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