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Commissioner of Income-tax Vs. Steel Rolling Mills of Hindusthan Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 515 of 1974
Judge
Reported in[1983]143ITR933(Cal)
ActsIncome Tax Act, 1961 - Section 271(1); ;Finance Act, 1965
AppellantCommissioner of Income-tax
RespondentSteel Rolling Mills of Hindusthan Pvt. Ltd.
Appellant AdvocateR. Prosad and ;Sunil Mukherji, Advs.
Respondent AdvocateA.K. Roy Chowdhury, Adv.
Excerpt:
- .....back an amount of rs. 5,33,459 to the total income of the assessee. simultaneously, he initiated penalty proceedings under section 271(1)(c) of the 1961 act and as minimum penalty imposable exceeded rs. 1,000, he referred the matter to the iac.3. analysing the total addition of rs. 5,33,459, the iac came to the conclusion that the assessee had concealed particulars of its income or furnished inaccurate particulars in respect of interest and brokerage on hundi loans amounting to rs. 87,533. he also came to the conclusion that the assessee had concealed its income to the extent of rs. 3,15,814 in respect of the stocks shown in the balance-sheet at a figure substantially lower than what was pledged with the bank for obtaining an overdraft. accordingly, he imposed a penalty of rs......
Judgment:

Sabyasachi Mukharji, J.

1. The assessment year involved is 1962-63. The question referred to us is as follows:

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

2. The facts of the case were as follows :

The ITO, while computing the total income of the assessee, added back an amount of Rs. 5,33,459 to the total income of the assessee. Simultaneously, he initiated penalty proceedings under Section 271(1)(c) of the 1961 Act and as minimum penalty imposable exceeded Rs. 1,000, he referred the matter to the IAC.

3. Analysing the total addition of Rs. 5,33,459, the IAC came to the conclusion that the assessee had concealed particulars of its income or furnished inaccurate particulars in respect of interest and brokerage on hundi loans amounting to Rs. 87,533. He also came to the conclusion that the assessee had concealed its income to the extent of Rs. 3,15,814 in respect of the stocks shown in the balance-sheet at a figure substantially lower than what was pledged with the bank for obtaining an overdraft. Accordingly, he imposed a penalty of Rs. 54,000.

4. Being aggrieved by the order of the IAC the assessee came up in appeal before the Tribunal. As regards the interest and brokerage on hundi loans, the learned representative for the assessee submitted that these were fully covered by the assessee's disclosure of Rs. 8,52,942 under Section 68 of the Finance Act, 1965, which was accepted by the Department and so the assessee could not be penalised in respect of these accounts. Further, it was submitted that the Department had not been able to establish with positive evidence that the assessee had concealed income or had furnished inaccurate particulars in this regard. Finally, it was submitted that the assessee's case was fully covered by the decision of the Supreme Court in Anwar Ali : [1970]76ITR696(SC) and, therefore, the penalty imposed by the IAC was bad in law. As regards the discrepancy in the stocks shown in its balance-sheet and that pledged with the bank, it was submitted that the value of the stock which was hypothecated with the bank had been estimated by a rough and ready method, and that the figure shown in the balance-sheet was correct. Further, the learned representative for the assessee relied on the decision of the Bombay High Court in the case of CIT v. Gokuldas Harivallabhdas : [1958]34ITR98(Bom) and more particularly on the observations contained at p. 106, which are as follows :

' It has often been said that each proceeding under the Income-tax Act is a self-contained proceeding and the findings in one proceeding do not become binding in respect of other proceedings. Now, it is difficult to understand why this well-known principle should be departed from in penalty proceedings. If anything, if the principle is not well established so far as the assessment proceedings are concerned, then it should be established so far as penalty proceedings also are concerned. The assessment proceedings are taxing proceedings; the penalty proceedings are criminal proceedings in their very nature, and a decision given in an assessment proceeding cannot possibly be binding upon the authority who tries the assessee for an offence.'

and submitted that the penalty imposed under Section 271(1)(c) of the Act was bad in law,

5. The Tribunal, after considering the rival contentions, observed, inter alia, as follows:

' We have carefully considered the rival submissions and are of the view that this is a fit case for imposition of penalty under Section 271(1)(c) of the 1961 Act. We may state that the assessee had filed a loss return of Rs. 7,95,109 while the Income-tax Officer completed the assessment on a total income of Rs. 4,18,188 after making various additions and disallowances. Of these additions, the chief item is of Rs. 3,15,814, about which the Inspecting Assistant Commissioner has made out quite a convincing case against the assessee at para. 6 of his penalty order.

However, the reasons given by him, though quite valid for the purpose of assessing the amount as the assessee's unexplained income, are not good enough for establishing a charge of concealment of income to this extent. In our view, the Revenue has not discharged the onus of proving concealment of income and, therefore, the assessee's case is fully covered by the decision of the Supreme Court in the case of Anwar Ali : [1970]76ITR696(SC) . In this view of the matter, we cancel the penalty order of the Inspecting Assistant Commissioner.'

6. In view of the fact that the order in question is before the addition of the Explanation to Section 271(1)(c) and in view of the findings recorded by the Tribunal and in view of the nature of the question referred to us, we must hold that the Tribunal was justified in arriving at its conclusion. The question is, therefore, answered in the negative and in favour of the assessee.

7. The parties will pay and bear their own costs.

Suhas Chandra Sen, J.

I agree.


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