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TMI Blog1990 (8) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the assessee-firm was liable to be penalised for concealment of income by the managing partner, P. V. S. Mani ? " The assessee is a partnership. It carries on transport business on large scale which is evident from the fact that, during the material period, it had as many as 83 branches all over the country. The assessment year involved is 1962-63 for which the previous year is from July 1, 1960, to June 30, 1961. The return of income for the year was filed on August 31, 1962. Income disclosed was Rs. 4,00,487, though the profit and loss account accompanying the return disclosed a profit of Rs. 3,69,325. On the first date of hearing on September 7, 1962, the assessee produced its books of account including cash book, ledger, etc., before the Income-tax Officer. During the pendency of the assessment proceedings, it was claimed on behalf of the assessee that a fire had taken place on March 8, 1965, in one of its premises where all the books of account for the year and other years were stored. The fire, it was further claimed, destroyed all the books and documents. On October 11, 1965, the income-tax authorities searched the business premises of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment for the year was completed on March, 30, 1967, i.e., in November, 1966, the assessee filed its first petition for settlement before the income-tax authorities. A second settlement petition was filed on November 22, 1967, by which income of Rs. 18,99,239 was offered to be spread over ten years ending June 30, 1965. This was at a stage when the assessment for the year had already been completed and the appeal thereagainst was pending before the Appellate Assistant Commissioner. On February 19, 1968, the Income-tax Officer filed a criminal complaint against the assessee-firm, its managing partner, Shri P. V. S. Mani, and the financial controller, Shri E. K. Balkrishnan, under sections 278 and 279 of the Income-tax Act, 1961. Thereafter, the assessee filed a third settlement petition before the Central Board Direct Taxes on June 28, 1968. This was seriously pursued and a lot of correspondence was exchanged between the assessee and the Department thereafter. Eventually, on December 31, 1968, the assessee wrote a letter to the Commissioner agreeing to the addition of the additional income of Rs. 18,10,000 to be spread over nine years from the assessment year 1958-59 to the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s altogether different. It held that the identity and content of the addition of Rs. 4,00,000 was in no way different from the addition of Rs. 5,00,000 made by the Income-tax Officer as suppressed income from the transport business. The Tribunal also found a lot of material independent of the terms of the settlement which was brought on record by the Income-tax Officer and, in its view, the said material justified a finding that the assessee had concealed its income. However, taking into account all relevant aspects, the Tribunal considered it fair and reasonable to maintain the minimum penalty imposable under the Act. The Department has accepted the Tribunal's order and the assessee alone has come up by way of reference. In the circumstances, the first and the only material question which we have to consider in this reference is whether the Tribunal was justified in giving a finding that the assessee had concealed its income from transport business to the extent of Rs. 4,00,000 an addition finally maintained (sic). Once such a finding is found to be justified, the minimum penalty only having been imposed, no other question will arise for consideration. Ordinarily, the conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lars of his income or furnished inaccurate particulars thereof. The assessment for the year 1962-63 was completed on March 30, 1967, i.e., long before the settlement between the assessee and the Department. The total addition to the income disclosed was of a sum of Rs. 7,96,276 which included an addition of Rs. 5,00,000 as suppressed profits in the goods transport business. This addition was on the basis of material on record including tentative profit and loss statement found in the assessee's business premises at the time of search in October, 1966. Income from the transport business was, according to that statement, Rs. 8,46,107 as against the returned income of Rs. 4,00,487. The Income-tax Officer had recorded his satisfaction under section 271 (1) (c) in the following words : "In view of what has been stated in the preceding paragraphs, I am satisfied that: (i) there has been a deliberate and intentional attempt on the part of the assessee to reduce the liability to tax of the firm and the partners thereof by wilfully omitting and by understating income and overstating the expenditure and by suppression of material evidence. (ii) The profit and loss statement for the year e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transport business was restricted to Rs. 4,00,000 on the basis of the settlement. On that basis, it may be possible to argue that the mere fact that an addition is made in a particular year as a result of the settlement will not necessarily justify the conclusion that the amount added represented the income of the assessee for that year, far less the concealment of the income for that year. The facts in the present case are, however, different. The Income-tax Officer had made an addition of Rs. 5,00,000 as suppressed profits from transport business on the basis of independent material referred to in great detail in the order of the assessment. He recorded his satisfaction under section 271(1) that the assessee had concealed income on the basis of that material. The addition as suppressed income from the transport business was restricted to Rs. 4,00,000 for the year on the basis of that material. The addition was not made by just equally or in some other way distributing the total amount of addition agreed upon to be assessed in nine years. The addition maintained for the year had a direct nexus with the material brought on record during the course of the assessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material in support of the claim that it had not concealed any income nor particulars thereof or some evidence or material relevant in this behalf has come on record, it is not merely desirable but also necessary for the Inspecting Assistant Commissioner to consider all such evidence and material that has come on record during or after the completion of the assessment while considering the imposition of penalty under section 271 (1) (c). The only condition will be that the assessee should have an opportunity to have his say on each and every such evidence or material. In this view of the matter, we are not able to appreciate the grievance of the assessee. Therefore, we answer the second question in the negative and in favour of the Revenue. The third question is : "Whether, on the facts and in the circumstances of the case, the order of the Inspecting Assistant Commissioner was vitiated and was liable to be cancelled on the ground that it was partly based on inadmissible evidence ?" Beyond stating that the order of the Inspecting Assistant Commissioner was vitiated as it was partly based on inadmissible evidence, Shri Pikale was not able to point to any evidence or material, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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