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TMI Blog1966 (10) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1922, to state a case on the following question, viz. : " Whether the department could start penal proceedings under section 28(1)(c) of the Income-tax Act when the computation of the income of the assessee was made under the proviso to section 13 of the Act ? " The parties are agreed that this question as framed does not arise on the facts and in the circumstances as set out in the statement of the case. We have, therefore, in order to bring out the exact scope of the matter upon which our opinion is sought, reframed the following question as arising out of the statement of the case : " Whether, on the facts and in the circumstances of the case, penal proceedings under section 28(1)(c) of the Indian Income-tax Act could be validl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated March 13, 1952, called upon the firm to show cause in writing or in person as to why penalty under section 28 should not be levied on it for having concealed the particulars of its income, etc., as detailed in the assessment order. To this, a reply was sent that the entire assessment was based upon mere conjectures and the estimate made was without any basis, and, hence, the Income-tax Officer was asked to stay the proceedings till the appeal was decided. After the appeals were disposed of, the assessee was given a further opportunity of being heard on September 24, 1956. No further evidence was produced but it was contended that the firm having become dissolved no penalty can be levied. The Income-tax Officer having been satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of Rs. 8,335, the assessee knew that it did not represent the true income. The Tribunal was satisfied that when the assessee took key loans of Rs. 16,000 and Rs. 11,000 on December 6, 1946, and December 10, 1946, respectively, from the Andhra Bank Ltd., by showing the said loans as having been raised on November 15, 1946, and November 16, 1946, when otherwise there would have been cash deficits, the assessee had deliberately manipulated its accounts. For these reasons, the Tribunal confirmed the order of the Appellate Assistant Commissioner. The book results were rejected by the Income-tax Officer and an estimate of income was made under the proviso to section 13 of the Act. The assessee took key loans of Rs. 16,000 and Rs. 11,000 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of applicability of the method of accounting so as to attract section 13 of the said Act. No doubt, before the Income-tax Appellate Tribunal it was stated that the facts and circumstances of the case attract the provisions of section 13 and perhaps that view was accepted by it, but in our view, section 13 has no application to the facts and circumstances of this case. We have asked Mr. Shankar Rao, the learned advocate for the assessee, to show us what was the method of accounting which was not accepted by the assessing authorities and what was the method of accounting that was applied as a result of which the income was computed at Rs. 60,000 but he was unable to point out or satisfy us on this aspect of the matter. On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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