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Commissioner of Income-tax Vs. Imtiaz U. Digmar - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtGujarat High Court
Decided On
Case NumberIncome-tax Reference No. 266 of 1981
Judge
Reported in(1986)51CTR(Guj)175; [1987]163ITR229(Guj)
ActsIncome Tax Act, 1961 - Sections 271(1)
AppellantCommissioner of Income-tax
Respondentimtiaz U. Digmar
Advocates: B.R. Shah, Adv.
Excerpt:
- - a show-cause notice was issued, but the assessee failed to respond thereto.ahmadi, j.1. the assessee, an individual, filed his return of income for the assessment year 1969-70 on december 26, 1969. while declaring the total income of rs. 4,137, the assessee stated in part-iv of the return that he had received an amount of rs. 19,499 as prize from a crossword competition. the income-tax officer completed the assessment under section 144 of the act in view of the default committed by the assessee in complying with the notice served on him under section 142 of the act. the total income computed was rs. 25,586. the income-tax officer also initiated proceedings for imposition of penalty for concealment of income under section 271(1)(c) of the act. a show-cause notice was issued, but the assessee failed to respond thereto. the income-tax officer, therefore, came to.....
Judgment:

Ahmadi, J.

1. The assessee, an individual, filed his return of income for the assessment year 1969-70 on December 26, 1969. While declaring the total income of Rs. 4,137, the assessee stated in Part-IV of the return that he had received an amount of Rs. 19,499 as prize from a crossword competition. The Income-tax Officer completed the assessment under section 144 of the Act in view of the default committed by the assessee in complying with the notice served on him under section 142 of the Act. The total income computed was Rs. 25,586. The Income-tax Officer also initiated proceedings for imposition of penalty for concealment of income under section 271(1)(c) of the Act. A show-cause notice was issued, but the assessee failed to respond thereto. The Income-tax Officer, therefore, came to the conclusion that the assessee was guilty of concealment and had filed a return containing incorrect particulars. In the opinion of the Income-tax Officer, the assessee's case fell within the Explanation to section 271(1)(c) of the Act and accordingly the Income-tax Officer imposed a penalty of Rs. 20,000. The assessee carried the matter in appeal before the Appellate Assistant Commissioner, who, following the decision of the Tribunal in the case of Nazir Ahmed U. Digmar, held that the imposition of penalty was not justified inasmuch as the assessee had made a disclosure of the income in Part-IV of the return. The Appellate Assistant Commissioner, therefore, held, following the decision of the Tribunal, that there was no gross or wilful neglect on the part of the assessee. He, therefore, set aside the Income-tax Officer's order imposing penalty under section 271(1)(c) of the Act. The Revenue, therefore, approached the Tribunal in appeal. The Tribunal dismissed the appeal following its earlier decision on which the Appellate Assistant Commissioner has placed reliance. The Revenue, therefore, sought a reference which has been allowed under sub-section (2) of section 256 of the Act on the following two questions :

'(1) 'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that due to disclosure made by the assessee in Part-IV of the return, the assessee could not be said to have furnished inaccurate particulars of income within the meaning of section 271(1)(c) of the Act, and consequently, levy of penalty under the said section was not justified

(2) Whether the Tribunal was right in law in holding that there was no gross or wilful negligence on the part of the assessee nor was it a case of fraud. and, therefore, levy of penalty on the basis of the Explanation to section 271(1)(c) of the Act, on the facts of the case, was not justified ?'

2. For reasons which we will immediately state, we are of the opinion that both the questions must be answered in the negative, i.e., against the assessee and in favour of the Revenue.

3. Similar questions arose for determination before this court in the case of CIT v. Suleman Abdul Sattar [1983] 139 ITR 8. In that case also, the premises from which the crossword competition was carried on was searched and certain documents and materials were seized and statements of individuals concerned with the crossword competition were recorded in the course of inquiry and it was discovered that the crossword competition was conducted solely with the object of helping persons who had unaccounted money to disclose the same as having been won in a crossword competition. The modus operandi was that those who had unaccounted money and desired to convert it into white money approached the organisers of the crossword competition, who on payment of 10% of such money by way of commission arranged to secure a prize for such assessee which could be shown as won in a crossword competition while submitting the return for the relevant assessment year. The court came to the conclusion that this was a clear case of fraud inasmuch as fake winners were declared so that they could convert their unaccounted money into white money as having been won in the crossword competition.

4. In the present case also, the finding of fact recorded is that the amount of prize-money shown in Part-IV of the return was in fact not won in any crossword competition, but the same was fraudulently mentioned in Part-IV of the return with a view to converting unaccounted money in the sum of Rs. 19,499 into white money. As in that case so also here, the Revenue would be entitled to impose penalty by virtue of the Explanation to section 271(1)(c) of the Act. We do not think it necessary to enter into a detailed discussion of the legal aspects in the matter of levy of penalty under the said provision since the same have been dealt with by this court in the case of CIT v. Suleman Abdul Sattar [1983] 139 ITR 8, which is binding on us. For the same reasons, we are of the opinion that the Revenue was justified in initiating proceedings under section 271(1)(c) of the Act and in imposing penalty on the assessee under the Explanation thereto. We, therefore, hold for the reasons stated in that judgment that the Tribunal was in error in coming to the conclusion that the Revenue was not entitled to levy penalty under the said provision. We, therefore, answer both the questions in the negative i.e., against the assessee and in favour of the Revenue and dispose of the reference accordingly with no order as to costs.


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