1986 (3) TMI 128

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..... observed that penalty amount of Rs. 15,000 which was levied on the assessee by the Excise Taxation Deptt. was nowhere reflected in the books of accounts on one hand, secondly, the assessee was found to have committed three offences by the Excise Taxation Deptt., that of adulteration by mixing water in the liquor, overcharging and opening their vends on dry days for which ultimately the penalties were levied. The ITO on all these accounts, finding the GP rate disclosed to be low, made addition of Rs. 97,221 as detailed in his assessment order at length. The said addition was comprised of Rs. 33,792 on account of unaccounted sales or adulterated liquor sales, Rs. 15,000 paid on account of penalty outside the books and Rs. 48,429 for overc .....

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..... lso mentioned that penalty amount was recovered from the 'Karindas' and 'Ahatawala' and was paid to the government. The very strange thing which is found in the said letter is self-explanatory which reads as under: "The addition of water in the sales effected at Ahata and also by open sale at Ahata, the assessee-firm was able to cover up by the loss and the necessary profits have already been incorporated in the books of account of the firm. Therefore, the conversion of bottles, pints and nips into proof liters clearly shows that the assessee-firm sold 2112 bottles more and the sale proceeds of the same have also been included. It was this modus operandi and hence overcharging of the assessee could convert a straight loss into profit of .....

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..... demand notice and they collected the same from "Karindas" is just mentioned to be rejected. We are unable to appreciate the contention of the assessee that they are not parties to the same. In course of arguments, they had relied on our earlier decision in allied concern but there though we had sustained some addition for possible leakage, there were no official or Court orders regarding levy of penalty. Therefore, the said judgment cannot come to the rescue of the assessee and then even there in the said judgment we had sustained the addition in a small amount. 7. Regarding the penalty of Rs. 8,000, ultimately Rs. 5,000 penalty was levied but it does not exonerate the assessee. On the same basis of facts that amount of Rs. 15,000 was no .....

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