9911796707
TMI Blog1960 (4) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... 950 were as under: Previous year Calendar year Assessment year Exports Commission added Rs. 1948 1949-50 2,00,000 (Approx.) 7,569 1949 1950-51 4,88,086 18,527 1950 I95I-52 7,50,000 (Approx.) 23,082 In its return for the assessment year 1949-50 the assessee did not include any profit of the Bangkok branch but made a declaration on the return filed by it as under: "The books of account of the Bangkok branch are not available at present. I have no objection in case the profits earned there are estimated subject to action under section 34 or 35 on production of statement of accounts." The Income-tax Officer completed the assessment estimating the profits of the branch at 5% on the prices shown in the invoices. For the assessment year 1950-1951 (C.Y. 1949) there was no reference to the Bangkok business in the return filed by the assessee. The Income-tax Officer did not accede to the plea of the assessee that the profits at Bangkok could not exceed 2 per cent. of the export value of the goods and estimated the profits once again on the basis of 5 per cent. of the export price of those goods. In respect of the assessment year 1951-52 (C.Y. 1950) also the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary, 1952, requiring the assessee to show cause why a penalty under section 28(1)(c) for concealment of particulars should not be levied. In respect of the assessment year 1952-53 (C.Y. 1951) the assessee firm adopted the same attitude but the Income-tax Officer persisted in production of the profit and loss account and books of the company which were eventually produced by the assessee firm and showed the following eloquent position: Calendar year Assessment year Turnover Net Profit Rs Rs 1949 1950-51 8,23,050 59,232 1950 1951-52 8,21,935 1,25,520 With that information before him the Income-tax Officer commenced proceedings under section 34 for the assessment year 1950-51. The assessee firm made its return as required by that section, in which it showed the correct profits at ₹ 1,25,520. The Income-tax Officer completed the assessment after directing an issue of a further notice under section 28(3). That notice is dated 8th April, 1954. The position, therefore, at this stage was that two notices under section 28(3) had been issued on the assessee firm. In respect of the first notice the reply of the assessee was that there was no concealment as the return wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gkok business as the only basis for such a levy is not only technical but open to serious argument in the unsatisfactory manner the assessment had been completed in the past. The levy of ₹ 20,000 therefore has to be remitted in full. The levy of ₹ 68,501 is entirely different. With the definite knowledge that the Income-tax Officer had obtained that the profit for the year was ₹ 1,25,520, he has clearly proved guilt of concealment against the assessee; it was not declared by the assessee nor was a reference thereto made in the return with a request for proper ascertainment in due course. It is clear that the assessee had hoped for the best, but had been found out. It can be no defence for the assessee that it had faithfully shown this in the section 34 return; it is all the same true and cannot be disputed that it was not in the original return and it is this return that is material for penalty proceedings. There is abundant legal authority for this proposition. The quantum of the penalty is equal to the tax sought to be avoided. The offence proved to the hilt against the assessee is indeed grave and there are no extenuating circumstances. The penalty is not at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy of ₹ 68,501 was entirely different, as the Income-tax Officer had definite knowledge when he dealt with the second penalty notice that there was proof of concealment of the particulars relating to the profits at Bangkok. The argument urged before the Tribunal in respect of the penalty of ₹ 68,501 was that by the imposition of the first penalty, the assessee's liability under section 28 became discharged and therefore the second penalty imposed on the assessee was void and there was no question of considering any further that aspect of the matter. The suggestion was that a penalty could be imposed under section 28(1)(c) only once in respect of concealment of all the particulars of his income by an assessee. That argument did not find favour with the Tribunal and in our opinion rightly. It has been argued before us by Mr. Kolah, learned counsel for the assessee, that there was no concealment of income and no deliberate furnishing of any inaccurate particulars in respect of either of the penalty notices. That obviously is a finding of fact and we do not see how Mr. Kolah can ask us: to sit in appeal over any conclusion of facts reached by the Tribunal. Then, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... renuously urged before us by Mr. Kolah that the Income-tax Officer had knowledge of all the relevant facts and particularly those gathered from the books of account of the Bangkok business and the statement of profits and losses which were produced before him on 17th August, 1953. This, it has been said, was before the order levying the first penalty of ₹ 20,000 was passed. The argument has run that it was on identical facts that the second penalty was imposed on the assessee. The argument in our opinion is ill-founded. The crucial date is not 22nd January, 1954, on which date the first order imposing the first penalty was passed but 31st January, 1952, on which the original order of assessment was made and on which date the first penalty notice was issued. We have to particularly bear in mind this date, 31st January, 1952, since the knowledge which the Income-tax Officer had at that stage must-even on Mr. Kolah's argument relating to knowledge being an important factor in this case-have bearing on the case. Let us see what knowledge, if any, the Income-tax Officer had on 31st January, 1952. The assessee had addressed to the Income-tax Officer a letter dated 15th December ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the second penalty could have been imposed. We have already pointed out that for the present purpose it is not the date on which the order imposing the first penalty was passed that is to be regarded but the material date is the date on which the assessment order was made and the first penalty notice was issued. The facts which we have already summarised clearly go to establish that the basis for the two notices was not the same. We may point out that the quantum of any penalty to be imposed under section 28 has to be in a sum not exceeding 1½ times the amount of income-tax and super-tax payable by the assessee and that amount can only be the amount of tax which has been assessed for that particular year. Therefore, the penalty that could be imposed in case of an assessment on the basis of an estimated income could not be more than ₹ 20,000, whereas in case of the second penalty, the position was quite different. The amount of income on which the assessment was to be levied was found as large as ₹ 1,25,520. Mr. Kolah has drawn our attention to some decisions. They do not have any particular bearing on the question which we are called upon to determine and it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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