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Commissioner of Income-tax Vs. Clive Mills Co. Ltd. (In Liquidation) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 289 of 1969
Judge
Reported in(1982)27CTR(Cal)300,[1982]138ITR182(Cal)
ActsIndian Income Tax Act, 1922 - Section 28(1)
AppellantCommissioner of Income-tax
RespondentClive Mills Co. Ltd. (In Liquidation)
Appellant AdvocateAjit Sengupta and ;Sunit Mukherjee, Advs.
Respondent AdvocateNone
Excerpt:
- .....bills andvouchers were not produced. the ito held that the assessee had inflated the purchases of jute at bhairab and for such inflation he added a sum of rs. 1,73,678 in the assessment. the aac, on appeal, deleted the addition. but this was restored by the tribunal in second appeal. holding that the assessee had deliberately inflated the purchases of raw jute at bhairab agency in order to reduce its tax liability and that the assessee had concealed the particulars of its income or deliberately furnished inaccurate particulars of its income, the ito imposed a penalty of rs. 70,000 under section 28(1)(c) of the indian i.t. act, 1922.3. the assessee thereafter appealed to the aac. the aac observed that it was possible for a person to conceal the particulars of his income and deliberately.....
Judgment:

Sabyasachi Mukharji, J.

1. In this reference under Section 66(2) of theIndian I.T. Act, 1922, as directed by this court, the following question hasbeen referred to us :

'In the facts and circumstances of the case, was the Tribunal justified in drawing the inference that no concealment was established in respect of the sum of Rs. 1,73,678 and that no penalty was justified ?'

2. It appears that this reference relates to the assessment orders for the assessment year 1948-49 and is arising out of the penalty under Section 28(1)(c) of the Indian I.T. Act, 1922. The assessee is a company and it was carrying on business in the manufacture of jute goods. During the relevant previous year it purchased a substantial quantity of jute at its Bhairab Agency. The ITO found that the average purchase rate at such agency was Rs. 30.5 annas per maund as against the average market price of Rs. 29-7-3 pies per maund. In proof of the purchases the assessee produced only a register that was maintained at Bhairab, but bills andvouchers were not produced. The ITO held that the assessee had inflated the purchases of jute at Bhairab and for such inflation he added a sum of Rs. 1,73,678 in the assessment. The AAC, on appeal, deleted the addition. But this was restored by the Tribunal in second appeal. Holding that the assessee had deliberately inflated the purchases of raw jute at Bhairab Agency in order to reduce its tax liability and that the assessee had concealed the particulars of its income or deliberately furnished inaccurate particulars of its income, the ITO imposed a penalty of Rs. 70,000 under Section 28(1)(c) of the Indian I.T. Act, 1922.

3. The assessee thereafter appealed to the AAC. The AAC observed that it was possible for a person to conceal the particulars of his income and deliberately furnish inaccurate particulars thereof by suppressing evidence that was in his possession and could be produced and also by maintaining a so-called record of purchases which was merely a compilation enabling him to claim a higher amount towards purchase price than the amount actually paid by him and he upheld the order of penalty imposed by the ITO.

4. The assessee thereafter went up to the Tribunal and the Tribunal held that merely because the average price for purchases of jute shown by the assessee was more than that shown by some other assessees, it would not lead to a conclusion that the assessee had in fact shown a higher value for the purpose of purchases than the actual amount that the assessee had to incur. The Tribunal held that although there was justification in making an addition in the assessment, it could not be held, as a matter of fact, that the assessee: concealed the particulars of its income or deliberately furnished inaccurate particulars thereof. The Tribunal, therefore, came to the conclusion that no concealment was established and that the penalty was unjustified.

5. It appears that there was evidence before the Tribunal and the Trir bunal considered all aspects of the matter and came to the conclusion; which, in our opinion/has not been challenged either to be perverse or as based on no material. We are also of the opinion that the findings of the Tribunal were not perverse and were not based on no material.

6. That being the position, the question referred to us must be answered in the affirmative and in favour of the assessee.

7. There will, however, be no order as to costs.

Suhas Chandra Sen, J.

8. I agree.


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