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Banaras Chemical Factory Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 170 of 1972
Judge
Reported in[1977]108ITR96(All)
ActsIncome Tax Act, 1961 - Sections 271(1)
AppellantBanaras Chemical Factory
RespondentCommissioner of Income-tax
Appellant AdvocateP.N. Pachauri, Adv.
Respondent AdvocateDeokinandan, Adv.
Excerpt:
- - the assessee had clearly stated in its application that it had earned income of rs......completion of assessments.' 4. in due course, the inspecting assistant commissioner of income-tax levied penalty of varying amounts for assessment years 1956-57 to 1965-66, which were the assessment years involved. the assessee preferred ten appeals to the income-tax appellate tribunal which by a consolidated order dated 31st july, 1971, reduced the penalties to the minimum imposable under the act. the assessee's plea that it was not liable to penalty was not accepted. at the instance of the assessee the tribunal has made this reference. 5. now, a penalty is leviable under section 271(1)(c) of the act, if an assessee conceals his income or furnishes inaccurate particulars thereof. inasmuch as the assessee himself disclosed a concealed income of rs. 6 lakhs, there can be no manner of.....
Judgment:

R.L. Gulati, J.

1. This is a reference under Section 256(2) of the Income-tax Act, 1961.

2. The Income-tax Appellate Tribunal, Allahabad Bench, has submitted the statement of the case and has referred the following question for the opinion of this court:

'Whether, on the facts and in the circumstances of the case, the levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961, is Justified '

3. The assessee is a partnership firm. A search was carried out in its business premises and premises of the partners on October 3, 1964, when certain books of accounts and other documents were seized. From these documents it transpired that the assessee had been carrying on business on a large scale which was never entered in the account books produced before the department. The assessee, when confronted with this situation, by a written application dated October 4, 1966, made a voluntary disclosure of concealed income of Rs. 6 lakhs upon which it offered to be assessed. In the application the following prayer was made :

'We request that in view of co-operation extended by us, the penalty should be levied on a nominal ground only. In any case the amount of penalty to be levied has not been agreed upon and it may be considered on merits after completion of assessments.'

4. In due course, the Inspecting Assistant Commissioner of Income-tax levied penalty of varying amounts for assessment years 1956-57 to 1965-66, which were the assessment years involved. The assessee preferred ten appeals to the Income-tax Appellate Tribunal which by a consolidated order dated 31st July, 1971, reduced the penalties to the minimum imposable under the Act. The assessee's plea that it was not liable to penalty was not accepted. At the instance of the assessee the Tribunal has made this reference.

5. Now, a penalty is leviable under Section 271(1)(c) of the Act, if an assessee conceals his income or furnishes inaccurate particulars thereof. Inasmuch as the assessee himself disclosed a concealed income of Rs. 6 lakhs, there can be no manner of doubt that the assessee was guilty of concealment and, as such, was liable to penalty. The only ground pressed before us by the learned counsel for the assessee is that the assessments having been made on an agreed basis on the voluntarily disclosed income by the assessee, no penalty was leviable. There is no merit in this contention. The law does not provide that if an assessee makes a voluntary disclosure of its concealed income he has to be absolved from penalty. It is of course a circumstance which can be taken into consideration by the income-tax authorities in determining the quantum of penalty. The Tribunal has, in fact, taken into consideration this fact and has reduced the penalty to the minimum imposable under the law. The other contention that the assessee had never agreed to the imposition of penalty has also no force. The imposition of penalty is not a matter of course but is levied in accordance with the statutory provisions contained in the Income-tax Act. That apart, the assessee did not state in his application that it was not liable to penalty or that no penalty should be imposed upon it as a matter of compromise. On the other hand, the assessee had stated that a nominal amount of penalty should be imposed or that the question of penalty shouldbe left to be decided after the completion of the assessments. This request of the assessee is a clear admission of its liability to penalty. The penalty has been imposed after the assessments. The Tribunal having reduced the penalty to the minimum imposable under the Act, there was no further scope for any reduction. The assessee could not have been absolved from penalty because on its own admission it had rendered itself liable to penalty. The Tribunal, in these circumstances, could not allow any further relief to the assessee.

6. The learned counsel for the assessee stated that the sum of Rs. 6 lakhs offered by the assessee to be taxed was not its income. The offer was made only to avoid harassment and to purchase peace. There is absolutely no material on the record for such a contention. The assessee had clearly stated in its application that it had earned income of Rs. 6 lakhs which had been kept outside its account books and it does not now lie in its mouth that the disclosure made by it did not represent income.

7. We, accordingly, answer the question in the affirmative, in favour of the department and against the assessee. The department is entitled to the costs which we assess at Rs. 200.


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