1990 (2) TMI 104

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..... ssessee was constituted as a firm for the purpose of carrying on business of brick kiln. It commenced its business on 8th Nov., 1975 and the first previous year of the assessee ended on 31st March, 1976. For this period of the previous year, the assessee worked out the income by taking net profit at 12-1/2 per cent of sales of bricks of Rs. 1,33,215. From the gross profit so arrived at by the assessee amounting to Rs. 16,625, it claimed expenses of Rs. 8,652 and showed net profit of Rs. 8,000 as income declared in the return filed on 8th Aug., 1977. The sum of Rs. 8,000 declared in the return was shown as allocated to partners Shri Gurcharan Singh, Takhat Singh and Tejinder Paul Singh (minor) admitted to the benefits of partnership at 50 pe .....

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..... r of his has been accepted by both the sides. 5. In the penalty proceedings, the ITO, however, took the income declared in the return and the difference between the finally assessed income and the income returned at Rs. 28,040 as concealed income. In the status of unregistered firm, tax on total income of Rs. 36,040 come to Rs. 9,580. According to him, on concealed income tax was Rs. 9,580 and he proceeded to levy penalty at 150 per cent of this tax. The penalty was so quantified at Rs. 14,370. 6. The arguments in nut shell by the learned counsel for the assessee before us were that the assessee has not maintained any books of account and the total income which was computed in the assessment was on the basis of estimates and these est .....

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..... it was contended, wrongly proceeded under the provisions of s. 145(2) and if the books had not been produced, he could not have reached a satisfaction that either books were incorrect or incomplete or true profit and gains could not be deduced therefrom. Looked upon from any angle, it was argued, it was neither a case of concealment of income under s. 271(1)(c) or a case of imposition of penalty by invoking the provisions of Explanation 1 thereto. The authorities below erred in imposing and confirming the penalty. It may be cancelled. 8. The Revenue, on the other hand, contended that the penalty has been rightly imposed and confirmed as the assessee had failed to disclose fully and truly all material facts necessary for assessment and e .....

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