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TMI Blog1981 (8) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs for concealment of income or furnishing inaccurate particulars of income in respect of additions made, which as per Para 7 of assessment order aggregated to Rs. 80,769. As the concealed income exceeded Rs. 25,000 penalty proceedings were referred to IAC, Nasik u/s 274(2). IAC, Nasik levied penalty in respect of two additions, namely 1. Rs. 58,167 being profit on sale of 175 bales of cotton not declared in the original return, but declared in the revised return. 2. Rs. 25,000 added as income from undisclosed sources. In respect of the first item of Rs. 58,167, IAC observed that while with the original return assessee had filed copies of profit and loss account, balance sheet etc. with revised return no such copies or details of books fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons on this point before us are that the goods were sent to Bombay commission agent and no account was received from the latter and therefore 408 bales of cotton were shown in the closing stock and that this did not amount to concealment of income because sale therefore was bound to be reflected in the accounts for next year and that on the ITO's pointing out the agent's version, assessee had filed revised return and therefore, this at the highest amounted to only negligence on the part of the assessee, as concealment of income pre-supposes mens rea and from these facts, it cannot be said that the assessee had intention to conceal income or evade payment of tax. We were taken through examination of partner Dhanji Bhavanji (P.B. 33) on 27th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised return, concealment of income cannot be spelt out, not any gross or wilful neglect on the part of the assessee. We accept assessee's contention that at the most it may show negligence, but nothing more. Under these circumstances, levy of penalty on this ground cannot be sustained. 5. The next ground on which IAC has levied penalty in addition of Rs. 25,000 which partner Dhanji Bhavanji had withdrawn from the aforesaid Bombay agent for paying captivation fee for admission of his son in medical college in Sholapur on 22nd June, 1971. On this point, the preliminary objection of the ld. counsel for the assessee was that ITO had not initiated penalty proceedings in respect of this item and therefore, IAC cannot change the basis of conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in every step of the transaction which was admittedly for his private purpose. It was, therefore, urged that IAC was not justified either in law or on facts in levying penalty in respect of this item of Rs. 25,000. 6. The ld. Deptl. Rep. urged that ITO's mentioning Rs. 80,769 as additions in respect of which penalty proceedings were being initiated was obviously an arithmetical mistake because ITO had subsequently made reference to the IAC in respect of two items of Rs. 58,167 and Rs. 25,000. On merits, it was claimed that addition of Rs. 25,000 had been confirmed by Tribunal and if it was the concealed income of the partner, he had certainly taken a very circuitous route by depositing it in the firms account books and withdrawing the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid two items were not warranted, penalty order of the IAC has to be vacated. 10. For the sake of completeness, we may mention that the assessee had moved an additional ground that IAC erred in continuing with penalty proceedings and levying penalty on 7th Aug., 1980 because he had lost his jurisdiction in view of amendment of s. 274 w.e.f. 1st April, 1976. On this point, both the parties referred us to a number of decisions. Decisions in favour of revenue that IAC is not divested of jurisdiction by subsequent amendment are 1975 CTR (Mad) 162 : (1975) 100 ITR 170 (Mad), (1976) 105 ITR 518 (Guj), (1977) 107 ITR 753 (Guj), (1980) 122 ITR 301 (Guj), (1978) 114 ITR 905 (APPEAL), (1980) 14 CTR (P&H) 138 : (1980) 121 ITR 405 (P&H). The contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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