9911796707
TMI Blog2006 (1) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... "Whether, on the facts and circumstances of the case and in law, the Tribunal was justified in confirming the penalty of Rs. 30,000 levied under section 271(1)(c) of the Income-tax Act, 1961?" The assessment year is 1982-83 for which the relevant accounting period is the calendar year 1981. The assessee is a firm, carrying on the business of dealing in machinery spares, tools, etc. For the year under consideration, the assessee had returned total income of Rs. 42,620, which was assessed at Rs. 80,670 under section 143(3) of the Act. The additions, inter alia, included addition of Rs. 44,106 towards suppression of sales. Accordingly, penalty proceedings under section 271(1)(c) of the Act were initiated by the Assessing Officer by issuing notice under section 274 of the Act. After considering the explanation of the assessee, the Assessing Officer held that the assessee had concealed the particulars of income and, accordingly, levied penalty of Rs. 30,000 under section 271(1)(c) of the Act. The assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) observed that the assessee had not disputed the recovery of loo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 271(1)(c) of the Act was upheld by the Commissioner of Income-tax vide his order dated September 4, 1989. In further appeal, the Tribunal confirmed the order of the Commissioner of Income-tax vide its order dated June 15, 1994. Heard Mr. R.K. Patel, learned advocate for the applicant-assessee and Mr. B.B. Naik, learned standing counsel for the respondent-Revenue. Mr. R. K. Patel assailed the order of the Tribunal contending that the penalty had been levied solely on the basis of the order passed in the quantum proceedings. It was submitted that the penalty proceedings cannot be placed at par with the assessment proceedings and that the penalty cannot be imposed under section 271(1)(c) of the Act solely on the basis of the reasons given in the original assessment order. In support of this contention, reliance was placed upon the decision of the apex court in the case of CIT v. Khoday Eswarsa and Sons [1972] 83 ITR 369. It was submitted that the estimated figure of sales of Rs. 44,106 is a mere guess work. It was submitted that the book results have been accepted and section 145 of the Act has not been invoked at the assessment stage. Referring to the provisions of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT v. Parmanand M. Patel [2005] 278 ITR 3 to contend that the scheme of the Sales Tax Act and the Income-tax Act, are different in content and legislative intent, hence, the Assessing Officer was not justified in imposing penalty on the basis of the reasons given in the original assessment order, which in turn was based upon the estimation of concealed sales made by the sales tax authorities in proceedings under the Sales Tax Act. Learned counsel further submitted that penalty cannot be imposed if the facts and circumstances of the case are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. That, if the assessee's explanation is unproved, but not disproved, penalty cannot be levied in the absence of any material to indicate that the amount in question was the income of the assessee. Reliance was placed upon the decision of this court in the case of National Textiles v. CIT [2001] 249 ITR 125, as well as in the case of Dahod Sahakari Kharid Vechan Sangh Ltd. v. CIT [2006] 282 ITR 321 (Guj) in support of the aforesaid contention. Reliance was also placed upon the decision of this court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales tax department had recovered kachcha bills and the sales recorded therein were not reflected in the regular books of account. The Assessing Officer found that in the circumstances, the sales tax authorities were justified in estimating the sales in respect of kachcha bills that were not produced. The assessee had not been able to rebut the case made out against it, hence the Assessing Officer was justified in coming to the conclusion that the undisclosed sales represented the assessee's unrecorded investments plus profits thereon, being its concealed income, and making addition of Rs. 44,106 to the assessee's total income. Mr. Naik also referred to the findings recorded in paragraphs Nos. 4 and 5 of the order of the Commissioner of Income-tax (Appeals). It was pointed out that the Assessing Officer had after making proper inquiries, as regards the findings recorded by the Sales Tax Officer, arrived at an independent finding that the assessee had suppressed the sales which represented the assessee's income. That independent findings had been given by the Assessing Officer that the assessee had resorted to making sales outside the books. The Commissioner (Appeals) found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax assessment. Dealing with the contention as regards the applicability of Explanation 1 to section 271(1)(c) of the Act, reliance was placed upon the decision of this court in the case of National Textiles v. CIT [2001] 249 ITR 125 to contend that no penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. Lastly it was submitted that even if the Explanation to section 271(1)(c) of the Act is invoked, the assessee had successfully discharged the onus which lay on it, by pointing out that the missing pages had been used for various other purposes. The undisputed facts as available on record are that the search was carried out by the sales tax authorities on April 27,1982. During the course of search several loose slips in the form of kachcha bills were found by the sales tax authorities. It was found that the assessee had issued bills up to serial No. 22 in relation to the year under consideration and that out of the same only 5 bills showing various amounts against various dates were found. The assessee could not produce the missing bills, nor co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account of the assessee-firm." As regards the missing bills, it was admitted on behalf of the assessee that the same could not be produced nor could any evidence be produced that the missing serial numbered bills were not kachcha bills but were used for some other purpose. It was submitted on behalf of the assessee that the remaining serial numbered bills were not sale bills, however, the same did not find favour with the authorities as the assessee was not in a position to produce any direct or circumstantial evidence before any of the authorities in support of its submission, either at the time of assessment proceedings or at the time of penalty proceedings. The bills, though kachcha, were serially numbered, hence, the onus lay on the assessee to point out as to what had happened to the remaining sale bills. It is necessary to note that the estimate made by the sales tax authorities has been accepted by the assessee and no explanation is available on record to show as to why the assessee did not dispute the addition in the sales tax proceedings. It is in the light of the aforesaid factual matrix, that the contentions raised on behalf of the assessee are required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h had resulted in concealment of income, and that therefore, the levy of penalty was inevitable. In the circumstances, it cannot be said that the penalty has been levied solely on the basis of the reasons given in the assessment order. It has also been contended that the books of account and subsidiary records have been maintained and regular method of accounting has been followed. That the book results have been accepted and section 145 of the Act has not been invoked at the assessment stage. That resort to section 144 of the Act can be made only where the Assessing Officer is not satisfied as regards the correctness or completeness of the accounts of the assessee. That, the book results had been accepted, hence, best judgment assessment could not have been made. As can be seen from the facts of the present case, all the authorities have concurrently found that the assessee has made sales outside the books of account. These suppressed sales are not reflected in the books. The Assessing Officer did not find that any particular entries in the books of account were not genuine. However, on the basis of the record seized by the sales tax authorities, the Assessing Officer found that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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