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TMI Blog1971 (12) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to set out the questions referred which are as follows: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the provisions of section 271/274 of the Income-tax Act, 1961, are applicable to the present case ? 2. Whether there is any material to warrant the finding that the assessee-company had concealed the particulars of its income or deliberately furnished inaccurate particulars thereof within the meaning of section 271(2) of the Income-tax Act, 1961 ? and 3. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in reducing the penalty under section 271(1)(c) from Rs. 70,000 to Rs. 5,000?" The first two questions do not need any reframing. The third question does not, however, clearly, bring out the matter in dispute between the parties, and as such it is reframed as below: "Whether, on the facts and in the circumstances, the finding of the Tribunal that the assessee had not concealed income to the extent of Rs. 67,500 and Rs. 21,700 within the meaning of section 271(1)(c) of the Indian Income-tax Act, 1961, is correct in law ?" The facts necessary for the decision of the question may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax referred to the agreement which had been entered into by the assessee with its loading and unloading contractors. According to the agreement, they were to be paid at 9 1/2 pies per maund, plus 2% allowance for shortage in transist. One Sri Kedar Nath Kanodia has been examined by the Income-tax Officer on July 20, 1959, and he had stated that he did not receive payment at the rate of 9 1/2 pies per maund, nor did he get credit for the value of 2% against shortage. It was also noticed that the actual shortage was 21,143 maunds valued at Rs. 26,429 while the assessee claimed Rs. 1,34,661 for shortage at 2%. In view of these facts, the assessee accepted the addition of Rs. 67,500 under this head made by the Income-tax Officer. The Inspecting Assistant Commissioner, taking into consideration all these facts, came to the conclusion that the assessee was reducing his income by debiting false claim for excess shortage. He held, therefore, that in respect of this item the assessee was guilty of intentional concealment. In respect of the third item of disallowance, relating to salary of outstation staff of loading contractors, the Inspecting Assistant Commissioner re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the mere fact that the additions had been accepted could not lead to the inference that the assessee was guilty of concealment, and inasmuch as the proceedings were one for penalty, the onus was on the department to establish that the assessee had in fact concealed its income. The Tribunal held that the Inspecting Assistant Commissioner of Income-tax fell into error in relying upon the statement of Sri Kedar Nath Kanodia, inasmuch as he was not a contractor employed by the assessee in the year of account. It referred to the statement of one Avinash Chand, who had stated that the excess shortage of 2% had in fact occurred and further that the assessee maintained staff at the centres at which the loading contractors were working. It also noticed that Avinash Chand had gone so far as to state the particulars of the staff maintained at the centre. The Tribunal did not give a categorical finding that it had relied upon the statement of Avinash Chand. It, however, held that in view of the fact that Avinash Chand had given a statement in favour of the assessee in respect of additions of two amounts, i.e., Rs. 67,500 and Rs. 21,700, the assessee could have taken up the stand that the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the Supreme Court, in a recent decision in the case of Commissioner of Income-tax v. Khoday Eswarsa Sons (Civil Appeal No. 648 of 1967 decided on 22-9-1971), has affirmed its earlier view. The question involved is, however, different. If the Tribunal had on a consideration of all the relevant material come to a conclusion that the department was unable to discharge the onus of proving that the assessee was guilty of concealment, it would have been difficult to take the view that the finding was vitiated. The omission of the Tribunal in a case to consider relevant material evidence vitiates its finding. (See Omar Salay Mohamed Sait v. Commissioner of Income-tax, and Udhavdas Kewalram v. Commissioner of Income-tax ). It is as such necessary to see if there has been any such omission as would vitiate the finding that there has been no concealment. In respect of the concealment of Rs. 67,500, the Inspecting Assistant Commissioner had relied upon the statement of Sri Kedarnath Kanodia, and the fact that the actual shortage was only 21,143, maunds, valued at Rs. 26,429, while the assessee had claimed Rs. 1,34,661 as also the fact that the assessee had surrendered the amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s represented its income. In the background in which the admissions have been made by the assessee, the admission to the effect that this item represented its income assumed considerable significance and was a factor which was relevant for coming to the conclusion as to whether the assessee was guilty of concealment or not. The finding of the Tribunal in respect of this amount also stands vitiated. We are, therefore, of the view that the finding that the assessee was not guilty of any concealment is incorrect in law. We now come to the question No. 2. This item relates to the disallowance in respect of purchase of cane. Although the Inspecting Assistant Commissioner had given a number of reasons for holding that the assessee was guilty of concealment, the Tribunal has not adverted to any of these reasons, neither has it given a finding that it was accepting the reasons given by the Inspecting Assistant Commissioner. For holding that the assessee was guilty of concealment in respect of this amount, it took into account the conduct of the assessee in the past years, it had agreed to some additions, and penalties were levied in respect of such concealment to which the assessee did n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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