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Rasoolji Buxji Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Income-tax Case Nos. 181 to 188 of 1980
Judge
Reported in(1986)50CTR(Raj)215; [1986]158ITR768(Raj)
ActsIncome Tax Act, 1961 - Sections 246(2) and 271(1)
AppellantRasoolji Buxji
RespondentCommissioner of Income-tax
Appellant Advocate S.K. Kakkar, Adv.
Respondent Advocate J.P. Joshi, Adv.
Excerpt:
.....in law in holding that the explanation to section 271(1)(c) as stood on the date of levy of penalty could hardly be invoked ? 5. whether, on the facts and in the circumstances of the case, the income-tax officer was satisfied during the course of assessment proceedings in res 2 and 3 are overlapping and it would be proper to redraft the questions as under, so as to bring out clearly the matter in issue which is required to be decided by this court:.....the assessee filed applications under section 256(1) of the act, for all the eight assessment years referred to above, requiring the tribunal to refer 18 questions to this court, said to be arising out of the order of the tribunal dated december 31, 1977. the tribunal, by its order dated june 28, 1979, partly allowed the applications submitted by the assessee under section 256(1), and drew up a statement of the case and referred the following five questions of law to this court, for its opinion :'1. whether, on the facts and in the circumstances of the case, in respect of the assessment years 1955-56, 1956-57, 1957-58, 1958-59, 1959-60, 1960-61, 1961-62 and 1964-65, legally any penalty under the provisions of section 271(1)(c) of the act could be levied? 2. whether, on the facts and.....
Judgment:

Dwarka Prasad, J.

1. These eight applications under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), have been filed by the assessee on the ground that the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (for short 'the Tribunal'), has declined to refer to this court some of the questions of law proposed by the assessee as arising out of the order of the Tribunal dated December 31, 1977.

2. The facts of the case, in brief, are that the assessee, M/s. Rasoolji Buxji Kathewala, Udaipur, is a firm consisting of 13 partners, which derives income from manufacture and sale of 'katha'. The assessee-firm allegedly borrowed money during the assessment years 1955-56 to 1961-62 and 1964-65 on the basis of 'hundis'. The assessment for the aforesaid years was completed by the Income-tax Officer without making any addition of the amounts of the alleged 'hundi' loans. It appears that on March 30, 1965, the Income-tax Officer, with the prior approval of the appropriate authority, reopened the assessments for all the aforesaid assessment years under Section 147(a) read with Section 148 of the Act on the ground that the alleged 'hundi' loans were not genuine and they represented the income of the assessee-firm from undisclosed sources. During the course of the proceedings for reassessment, the assessee made a disclosure application and expressed its desire to make a settlement under Section 271(4A) of the Act, in respect of the borrowings allegedly made on 'hundi' basis. After some correspondence had taken place between the assessee and the Commissioner of Income-tax (Central Circle), Delhi, the assessee made another application on June 11, 1969, in which it agreed that the assessments already made may be reopened and suggested that the additions may be made in respect of each one of the aforesaid assessment years in the course of the reassessment proceedings. The assessee also agreed to the levy of penalty under Section 271(1)(c) of the Act at the rate of 20% of the tax on the difference between the income originally returned for the assessment years 1955-56 to 1961-62 and 1964-65, and the income which may be assessed according to the settlement. It appears that reassessment proceedings were completed in respect of all the aforesaid assessment years in accordance with the settlement agreed upon by the assessee.

3. The Income-tax Officer then initiated penalty proceedings, but as the minimum penalty imposable exceeded Rs. 1,000 for each assessment year, the penalty proceedings were referred by him under Section 274(2) of the Act to the Inspecting Assistant Commissioner of Income-tax (Central) Range 1, New Delhi. The Inspecting Assistant Commissioner was of the view that the concealment of income represented by 'hundi' loans, interest and 'dalali', having been admitted by the assessee as per the settlement arrived at between the firm and the Commissioner of Income-tax, the assessee was liable to imposition of penalty under Section 271(1)(c) of the Act for concealment of income and for furnishing inaccurate particulars of its income. The Inspecting Assistant Commissioner, therefore, proceeded to impose minimum penalty leviable under Section 271(1)(c) of the Act being 20% of the difference between the tax on the returned income and the tax on the finally assessed income.

4. The assessee filed appeals against the imposition of penalty before the Tribunal and contended, inter alia, that there was no evidence before the Department for holding that there was any concealment of income on the part of the assessee and the mere fact that the assessee agreed to the making of additions in the returned income and also agreed to the levy of minimum penalty at the rate of 20% of the difference between the tax on the income originally returned and the tax on the finally assessed income, could not lead to the levying of penalty, as the onus of establishing the concealment of income lay on the Income-tax Officer or the Inspecting Assistant Commissioner concerned. All the contentions raised by the assessee, including the one referred to above, were rejected by the Tribunal while dismissing the appeals of the assessee by its order dated December 31, 1977.

5. Thereafter, the assessee filed applications under Section 256(1) of the Act, for all the eight assessment years referred to above, requiring the Tribunal to refer 18 questions to this court, said to be arising out of the order of the Tribunal dated December 31, 1977. The Tribunal, by its order dated June 28, 1979, partly allowed the applications submitted by the assessee under Section 256(1), and drew up a statement of the case and referred the following five questions of law to this court, for its opinion :

'1. Whether, on the facts and in the circumstances of the case, in respect of the assessment years 1955-56, 1956-57, 1957-58, 1958-59, 1959-60, 1960-61, 1961-62 and 1964-65, legally any penalty under the provisions of Section 271(1)(c) of the Act could be levied?

2. Whether, on the facts and in the circumstances of the case, the Inspecting Assistant Commissioner had legally taken action under Section 271(1)(c) of the Income-tax Act, 1961, when the default pertained to the assessment year 1955-56, for which the first assessment was made, under Section 23(3) of the 1922 Act ?

3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that quantum of penaly for concealment of income in the return submitted prior to April 1, 1962, couldbe determined by applying the law as it stood after April 1, 1962, and not before that date ?

4. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Explanation to Section 271(1)(c) as stood on the date of levy of penalty could hardly be invoked ?

5. Whether, on the facts and in the circumstances of the case, the Income-tax Officer was satisfied during the course of assessment proceedings in respect of all the years under consideration that the assessee had concealed its income or furnished inaccurate particulars of its income within the meaning of Section 271(1)(c) of the Income-tax Act, 1961 ?'

6. The Tribunal refused to refer the remaining questions proposed on behalf of the assessee.

7. Dissatisfied with the order passed by the Tribunal dated June 28, 1979, the assessee has filed these eight applications under Section 256(2) of the Act before this court and it was submitted that the Tribunal may be directed to refer the following four questions also to this court, for its opinion:

'1. Whether there was any concealment of income in the return filed by the assessee in response to the notice under Section 148 as the assessment was made on the very same figure shown by the assessee in response to the notice under Section 148 ?

2. Whether penalty under Section 271(1)(c) can be levied merely because the assessee had acquiesced at any stage for the reassessment ?

3. Whether the assessee's letter dated June 11, 1969, to the Commissioner of Income-tax is at all admissible as evidence in the penalty proceedings ?

4. Whether any penalty can be legally levied merely because there was an agreement between the assessee and the Revenue--there being no concealment of income '

8. Learned counsel for the assessee did not press question No. 1, but he vehemently argued that question No. 2 was a question of law arising out of the order of the Tribunal dated December 31, 1977, which ought to have been referred by the Tribunal to this court, for its opinion. The argument of the learned counsel was that in the penalty proceedings, the burden is on the Department to establish the fact of concealment of income by the assessee and that the Department was not entitled to take the benefit of the admission made by the assessee in the settlement application during the reassessment proceedings. It was urged by the learned counsel for the assessee that merely on the basis of the agreement between the assessee and the Revenue that penalty may be imposed upon it under Section 271(1)(c) at 20% of the difference between the tax on the income originally returned and the tax on the assessed income, the Inspecting Assistant Commissioner was not entitled to impose penalty under Section 271(1)(c) upon the assessee, without there being any proof or evidence of concealment of income on the part of the assessee.

9. In the face of the admitted facts, a question, of law arises out of the order of the Tribunal dated December 31, 1977, in addition to the five questions already referred by the Tribunal to this court by its order dated June 28, 1979. In our view, questions Nos. 2 and 3 are overlapping and it would be proper to redraft the questions as under, so as to bring out clearly the matter in issue which is required to be decided by this court:

'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, was justified in imposing minimum penalty upon the assessee under Section 271(1)(c) of the Income-tax Act, 1961, merely on the basis of the admission made by the assessee in its letter dated June 11, 1969, to the Commissioner of Income-tax for purposes of settlement during the reassessment proceedings '

10. Question No. 4, proposed to be referred by the assessee, is also fully covered by the question, which we have framed above. In this view of the matter, one more question should be referred by the Tribunal to this court for its opinion, in addition to the five questions already referred by the Tribunal by its order dated June 28, 1979.

11. The question referred to above arises in all the eight assessment years and as such all the eight applications under Section 256(2) are partly allowed but the Tribunal can send one consolidated reference in respect of all the eight assessment years 1955-56 to 1961-62 and 1964-65. Consequently, the Income-tax Appellate Tribunal is directed to refer the aforesaid question to this court for its opinion. As the statement of the case has already been sent by the Tribunal to this court in pursuance of its order dated June 28, 1979, if any supplementary statement of case is considered necessary, the same may be forwarded to this court while referring the question framed by us above.

12. The parties are left to bear their own costs of the proceedings in this court.


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