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TMI Blog2006 (8) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... specting Assistant Commissioner and the reasons which persuaded him to culminate the proceedings against the interests of the assessee, the Tribunal also did not consider the effect of and the fact that the assessee was persisting in maintaining the books of account in the same manner which were, for the earlier assessment years, found unreliable. Unfortunately, the Tribunal, for the reasons best known to it, has observed the order passed by this court in its complete breach. The Tribunal, on one side, was referring to the observations of the court to the effect that the assessee had failed to discharge the burden which lay on it under the Explanation but on the other hand the Tribunal held that the burden was upon the Revenue to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Income-tax Act by the Income-tax Appellate Tribunal, Ahmedabad Bench A , at the instance of the Revenue on the following question for our opinion: Whether the Appellate Tribunal is right in law and on facts in cancelling the penalty levied under section 271(1)(c) of the Act when no correct and complete accounts were maintained and the book results had been rejected from year to year and substantial additions made were accepted by the assessee and that inspite of this the assessee persisted in maintaining the books of account in the same way? 3. The short facts, leading to the present reference, are that the assessee which is in the hotel business, for the accounting year 1967-68, submitted its returned income, the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to this court, which was registered as I. T. R. No. 125 and 126 of 1978. The matter was finally heard and disposed of by a Division Bench of this court by order dated March 28, 1986. The said judgment stands reported in Addl. CIT v. Chandravilas Hotel [1987] 165 ITR 300 (Guj). The Division Bench of the High Court found that the Tribunal was unjustified in holding that the penalty could not be imposed. The High Court made various observations in its order including the observation that the approach of the Tribunal, in examining the question whether levy of penalty was justified, was erroneous and illegal. The High Court observed that in penalty proceedings the burden was upon the assessee to prove that he acted bona fide and there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or basis on which penalty was levied by the Inspecting Assistant Commissioner, the past history of the assessee's persistence in maintaining the books of account in the same manner though they were found unreliable was one of the factors which had gone into consideration in levying penalty, and this factor had been completely overlooked by the Tribunal while setting aside the order of the Inspecting Assistant Commissioner and cancelling the penalty imposed by him. 8. We have gone through the order passed by the Tribunal. With due respect to the Tribunal, we must say that it has ignored the mandatory direction issued by this court. Not only this, it has conveniently ignored the observations made by this court by not taking into conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section. 9. After considering the pros and cons al,1d the foundation on which the penalty proceedings were commenced, the High Court recorded its opinion that the assessee was a persistent defaulter for earlier years, it did not submit its income-tax returns, and every year there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he audit report was relied upon by the assessee himself and on the strength of that report he wanted to show to the Assessing Officer that the returned income was properly shown and there was no concealment. We could understand that there was a bona fide mistake or lapse on the part of the assessee and that there was no fraud or gross or wilful neglect on its part if the case was for one year only. If for six years the accounts were maintained in the same form and every year assessments were framed with the help and assistance of section 145(1) of the Act, then at least some order should have worked as an eye-opener for the assessee. Every year the assessee was repeating the same trend and still it wanted to say that it had not concealed th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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