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TMI Blog1985 (12) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 on October 31, 1967. A revised return was filed by the assessee on March 28, 1972, declaring a total income of Rs. 3,17,641. The Income-tax Officer, however, framed assessment under section 143(3) of the Act on February 28, 1973, computing the assessable income of the assessee at Rs. 7,59,120. By a letter dated July 24, 1972, the assessee contended that according to section 153 of the Act, the assessment should have been completed by March 31, 1972, and that the assessment having not been framed by that date, the same had become "time barred" and consequently according to the assessee, the assessment order dated February 28, 1973, was a nullity. The Income-tax Officer rejected the assessee's contention by holding that the case fell within the mischief of section 271(1)(c) of the Act and, therefore, under the provisions of section 153(1)(b) of the Act, the limit of 8 years from the end of the assessment year in which the income was first assessable applied to the case. In this context, the Income-tax Officer referred to his notices under section 143(3) of the Act dated November 6, 1971, and December 22, 1971, to point out that various defects and discrepancies had been noted in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2,45,600, it may be mentioned that the Income-tax Officer had prepared chart in respect of yarn for the period of three months, i.e., from January to March, 1967, and worked out a shortage of 4,712 kg. of yarn, the cost of which calculated at Rs. 50 per kg. worked out to Rs. 2,35,600. To this amount, a sum of Rs. 10,000 was added as representing the cost of the goods pledged by the assessee with the bank as on December 31, 1966. The assessee's explanation was rejected and an addition of Rs. 2,45,600 representing unexplained shortage of yarn and the source of pledging the stocks worth Rs. 10,000 with the bank was made by the Income-tax Officer. In appeal, the Appellate Assistant Commissioner reduced this addition to Rs. 2,11,000. The Tribunal in the quantum appeal, after considering the assessee's calculations as reasonable, accepted the shortage of 1,191 kg. of yarn admitted by it. As regards the reduced difference of 3,521 kg. of yarn (about 3,500 kg. as per the Tribunal) on the assessee's explanation that in the light of the stock tally for the assessment year 1968-69, this stock was utilised in the next year, the Tribunal concluded that the stock of 3,500 kg. of yarn was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove the charge under the main provision of section 271(1)(c), the Explanation to the said provision cannot be made to play any role unless the charge under the substantive provision is withdrawn or dropped ; otherwise the discretion of the authorities levying penalty between 100% and 200% would come in direct conflict with limitations of fictional concealment in which case such discretion simply must be non-existent. The Revenue charged the assessee with actual concealment and the Inspecting Assistant Commissioner's reference to the Explanation to section 271(1)(c) of the Act is entirely superfluous and wrong; the main provision of section 271(1)(c) and the Explanation attached to the said provision work alternatively; the Tribunal in the quantum appeal had found as a matter of fact that there was only an omission on the part of the assessee in not properly accounting for his closing stock to the extent of Rs. 1,26,000. The penalty provisions as provided in section 271(1)(c) read with its Explanation and further read with section 276 of the Act make it abundantly clear that when the Inspecting Assistant Commissioner proceeded to levy penalty of 150% for a particular addition, he ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the quantum appeal that there was only an omission on the part of the assessee ; even if by any stretch of imagination it can be held that the Inspecting Assistant Commissioner was acting or could act under the Explanation to section 271(1)(c), the onus of proving the difference of over 20% between the returned and the assessed income did not arise from any fraud or gross or wilful neglect on the assessee's part must be held to have been discharged on the facts on record; the Income-tax Officer's order admittedly was the result of confusion on his part and if the assessee also participated in such confusion, it has substantially suffered but there can hardly be any justification for any penalty much less penalty of 150% on the retained addition ; the Tribunal's decision in the quantum appeal has the effect of absolving the assessee even if it could be a case in which the Explanation to section 271(1)(c) of the Act was rightly brought into play by the Inspecting Assistant Commissioner. The learned counsel for the Revenue has contended that as against the returned income of Rs. 3,17,641, the assessed income after the decision of quantum appeal by the Tribunal stood at Rs. 4,43 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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