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TMI Blog1987 (4) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... es as agricultural income, in fact, did not actually represent agricultural income but represented income from undisclosed sources. Rejecting the explanations given by the assessees that the income proposed to be treated as income from undisclosed source, in fact represented agricultural income they had received from the grape garden by name " Draksha Kunju ", purchased by them with the funds obtained from the firm, National Cashew Company, of which they are the partners, the reassessments were completed. The Income-tax Officer thereafter initiated penalty proceedings under section 271(1)(c) and since the minimum penalty imposable would exceed Rs. 1,000, he referred the matter to the Inspecting Assistant Commissioner under section 274(2) of the Income-tax Act as it stood then. The Inspecting Assistant Commissioner, in his turn, enquired into the matter and found that there was concealment of income and accordingly a sum of Rs. 54,620 was levied as penalty on each of the assessees. Annexures to K are the penalty orders. The assessees filed appeals before the Appellate Tribunal. The Appellate Tribunal consolidated the appeals and disposed of them by a common order, annexure K. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fresh contentions of the assessees, namely, that the incomes treated as incomes from undisclosed source should have been assessed " in the hands of the Hyderabad partnership and not in the hands of the assessees ", the Tribunal has held as follows : " Besides, the assessees have shown in their returns a part of the share from this firm as interest and have courted assessments on such assessments. The assessments of such interest income have not been disputed. The assessments of these items of undisclosed incomes have also not been disputed in appeal by the assesses on this ground. In the face of this factum of actual assessments acquiesced in by the assesses here, we are unable to accept this contention. " (Emphasis supplied) It is thus clear that the Tribunal has accepted the case of the Department that the incomes treated as undisclosed incomes, in fact, belonged to the assessees and not to the Hyderabad firm, supposed to have been constituted by the assessees and one Ramanujam Thampi. That the case of the assessees that the grape garden, Draksha Kunju, at the relevant time belonged to the firm, is nothing but a travesty of truth, is clear from the following excerpts fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er levying penalty under section 271(1)(c) for the assessment year 1969-70. This is what the Inspecting Assistant Commissioner in annexure F order has stated : " In the appeal orders against penalty under section 271(1)(c) for assessment year 1969-70, the Income-tax Appellate Tribunal has clearly held that there is concealment of income (see paras. 18, 19 and 20 of their order dated January 25, 1978, referred to earlier). The Income-tax Appellate Tribunal has come to a finding that " the assessee had intentionally boosted up the income from grapes and to give the colour of agricultural income to his otherwise taxable income. " These findings have been upheld by the Appellate Tribunal. From the discussions above, it is clear that the Appellate Tribunal has not considered the question involved in the case in the right perspective. The very approach of the Tribunal to the issue is erroneous. The materials available on record would clearly show that the Appellate Tribunal has wrongly interfered with the orders of the Inspecting Assistant Commissioner levying penalty. The orders of the Inspecting Assistant Commissioner are, in fact, based on the findings of the Tribunal disposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny reference at the instance of the assessees. To this extent, there is concealment, the Tribunal has held, while disposing of the appeal against the order levying penalty for 1969-70. The entire proceedings, as already stated, related to the assessment of the incomes of the assessees. The incomes treated as undisclosed incomes of the assessees, at no point of time, have been treated as their agricultural income. Sri P. K. Ravindranatha Menon, learned counsel for the Revenue, however, submits that in the light of the specific finding by the Tribunal that " There is enough material to hold that the assessee had intentionally boosted up the income from grapes and to give the colour of agricultural income to his otherwise taxable income resulting in concealment of income by the assessees, the observation, in our judgment (extracted above), namely, "because, according to the Tribunal, the concealment of income is not attributable to the assessees, but only to the firm which is a distinct legal entity for the purpose of assessment under the Income-tax Act, [1961] " was not necessary. He, therefore, submits that in the interests of justice, we must make it clear that we should not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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