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TMI Blog1995 (1) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 271(1)(c) cannot be sustained ? 2. Whether the finding of the Appellate Tribunal that levy of penalty under section 271(1)(c) of the Income-tax Act, 1961, cannot be sustained is correct in law and sustainable from the acts, evidence an materia on record ? " The aforesaid questions arise in the background of the facts : The assessee, Messrs. Somnath Oil Mills, Veraval, which is a registered firm, carries on the business of running an oil mill. On January 6, 1972, the sales tax authorities conducted a raid in the premises of the assessee and during the search seized a number of documents. Thereafter, in the assessment proceedings for the accounting year 1970-71, the Income-tax Officer took cognizance of the documents seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the suppressed profits could be worked out at Rs. 50,000. He accordingly, enhanced the business income by Rs. 50,000. Against that order, the assessee preferred appeal I.T.A. No. 1077/Ahd/1974-75 before the Income-tax Appellate Tribunal, Ahmedabad. The Tribunal, by its judgment and order dated November 29, 1975, partly allowed the appeal. While allowing the appeal, the Tribunal rejected the contention that the addition of Rs. 35,220 as income from undisclosed sources was not justified. With regard to the addition of Rs. 50,000 in respect of the profits from the sale of oil and oil cakes, the Tribunal partly allowed the appeal. The Tribunal rejected the contention of learned counsel of the assessee by holding that there was no reason to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 974, under section 271(1)(c) of the Act, proceedings were initiated for levying penalty. At the time of hearing before the Appellate Assistant Commissioner, the assessee submitted that it actually suffered a net loss of Rs. 20,089 and that the sales tax liability pertaining to unaccounted transactions amounted to Rs. 38,000 and as such the loss would thus come to Rs. 58,089. It was further submitted that the figure arrived at by the Appellate Assistant Commissioner amounting to Rs. 50,000 would, in any case, come down, if the sales tax liability of Rs. 38,000 is considered. It was also pointed out that in view of the order passed by the Tribunal, working out the suppressed profits at Rs. 31,020, even if that figure is taken into considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of sales tax which worked out to Rs. 5,17,000 would be reasonable, and (iv) in the aforesaid quantum appeal, the admitted liability of sales tax is to be reduced from the turnover and not from the income. In spite of the aforesaid findings, however, the Tribunal arrived at the conclusion that it would be difficult to sustain the penalty proceedings for concealing particulars of income of furnishing inaccurate particulars thereof, because if the assessee's income is considered at Rs. 31,021 and the sales tax liability of Rs. 38,000 is deducted, there would be a loss. For this purpose, the Tribunal observed that it is well settled law that all facts and circumstances must lead to the undisputed and irresistible conclusion that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that purpose the method adopted by the assessee was required to be taken into consideration. From the aforesaid judgment of the Tribunal, which is final, it is apparent that after taking into consideration the sales tax liability, the Tribunal had directed to work out the net profit at the rate of six per cent. from the undisclosed sales. Hence, the reasoning given by the Tribunal that there were conceivably two opinions with regard to the fact whether the assessee had earned positive income in respect of which it was liable to tax is on the face of it unreasonable and inconsistent with its earlier decision, which has become final. Once it was finally established before the Tribunal that the assessee had suppressed the purchases of groundn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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