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Commissioner of Income-tax Vs. Sarda Rice and Oil Mills - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 497 of 1971
Judge
Reported in[1979]117ITR917(Cal)
ActsIncome Tax Act, 1961 - Section 271(1) and 271(4A)
AppellantCommissioner of Income-tax
RespondentSarda Rice and Oil Mills
Appellant AdvocateB.K. Bagchi and ;B.K. Naha, Advs.
Respondent AdvocateManas Banerjee, Adv.
Excerpt:
- .....follows. sarda rice & oil mills, the assessee, is a partnership firm. on the 30th april, 1966, the assessee filed a petition under section 271(4a) of the i.t. act, 1961, admitting, inter alia, that during the assessment years 1960-61 to 1966-67, it had earned additional business income of rs. 2,32,509 which had not been disclosed and included in its assessments and offered a sum of rs. 2,30,168 for taxation in the assessment years 1960-61 to 1965-66, the balance to be included in the return for the year 1966-67, not filed up till then.3. the ito reopened the assessments for the years 1959-60 to 1961-62. the assessee filed revised returns for the assessment years 1963-64 to 1965-66. for the other years returns had already been filed before the ito. in the reassessment, the ito added.....
Judgment:

Sen, J.

1. In this reference, at the instance of the Commissioner of Income-tax, West Bengal-II, Calcutta, the Tribunal, under Section 256(1) of the I.T. Act, 1961, has drawn up a statement of case and referred the following question as a question of law arising from its order :

'Whether, on the facts and in the circumstances of the case, and in particular of the fact that the assessee's petition to the Commissioner of Income-tax under Section 271(4A) of the Income-tax Act, 1961, was still pending with the Commissioner when order under Section 271(1)(c) was passed by the Inspecting Assistant Commissioner of Income-tax, the Tribunal was right in coming to the conclusion that provisions of Section 271(1)(c) were not attracted ?'

2. The facts found and/or admitted in these proceedings may shortly be stated as follows. Sarda Rice & Oil Mills, the assessee, is a partnership firm. On the 30th April, 1966, the assessee filed a petition under Section 271(4A) of the I.T. Act, 1961, admitting, inter alia, that during the assessment years 1960-61 to 1966-67, it had earned additional business income of Rs. 2,32,509 which had not been disclosed and included in its assessments and offered a sum of Rs. 2,30,168 for taxation in the assessment years 1960-61 to 1965-66, the balance to be included in the return for the year 1966-67, not filed up till then.

3. The ITO reopened the assessments for the years 1959-60 to 1961-62. The assessee filed revised returns for the assessment years 1963-64 to 1965-66. For the other years returns had already been filed before the ITO. In the reassessment, the ITO added certain amounts to the income of the assessee as income from other sources on the basis of the said disclosure petition. The ITO also initiated penalty proceedings and, as the minimum penalty imposable according to him exceeded Rs. 1,000, he referred the matter to the IAC.

4. The IAC rejected the contentions of the assessee that the concealed income had been voluntarily disclosed and, therefore, the penal provisions of Section 271(l)(c) were not attracted. He noted that the amounts added had not been disclosed at the original assessments for the years 1959-60 to 1962-63, nor was such additional income disclosed in the returns for the subsequent years. He imposed penalties in each of the said assessment years of the minimum amounts as provided in the statute.

5. Being aggrieved, the assessee preferred an appeal before the Income-tax Appellate Tribunal. It was contended on behalf of the assessee before the Tribunal, inter alia, that the penal provisions of Section 271(1)(c) were not attracted as neither the ITO nor the IAC had detected any concealment whatsoever on the part of the assessee but had relied entirely on the admissions of the assessee in the disclosure petition which was pending for orders before the CIT. The contents of the said petition had neither been proved nor verified. The onus of proving the concealment lay on the department which it had failed to discharge. It was contended further that revised returns had been filed before the completion of the assessments in question and, therefore, the assessee would be exempt from any penalty. Contentions to the contrary were made on behalf of the revenue.

6. The Tribunal found, inter alia, as follows:

(a) The disclosure petition had been made by the assessee for the limited purpose of obtaining concessions under Section 271(4A).

(b) The said declaration could not be utilised against the assesseefor levy of penalty under Section 271(1)(c).

(c) The disclosure petition was not properly verified nor had beenenquired into and as such it had no evidentiary value.

(d) Revised returns had not been filed for any of the years under consideration after the assessee filed the disclosure petition.

(e) The ITO had proceeded on the basis of peak credits in enhancing the income of the assessee and there were no definite findings either by the ITO or the IAC that these amounts were the concealed income of the assessee.

7. In these circumstances, the Tribunal held that the penal provisions of Section 271(1)(c) were not attracted.

8. In the reference applications made by the, CIT before the Tribunal, the finding of the Tribunal have been summarised as follows :

'The Tribunal, after considering the case in detail, allowed the assessee's appeals on the ground that the assessment had been made on the basis of the revised, returns and the disclosure petition filed by the assessee and that there was no definite finding either by the Income-tax Officer or by the Inspecting Assistant Commissioner of Income-tax apart from theassessee's disclosure statement that unexplained loans represented the assessee's concealed income. In the above view of the matter, the order of the Inspecting Assistant Commissioner levying penalty under Section 271(1)(c) of the Income-tax Act, 1961, was quashed.'

9. The question suggested by the Commissioner in the reference application was as follows:

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of Section 271(1)(c) of the Income-tax Act, 1961, are not attracted ?'

10. It does not appear to us that the Tribunal deleted the penalties on the ground that the same had been imposed while the assessee's petition under Section 271(4A) was pending with the CIT. This ground does not appear to have been agitated at all. The question as referred was not asked for by the Commissioner and the Commissioner, it appears, did not understand that the Tribunal had proceeded on the basis as has been suggested in the question referred.

11. For the reasons given above it appears to us that the question referred does not arise from the order of the Tribunal at all. If it is held that the real issue between the parties is contained in the question as suggested by the Commissioner then in our opinion the same has to be answered in favour of the assessee. The admitted position is that the ITO and the IAC proceeded entirely on the basis of the disclosure of the assessee. The Tribunal has found as a fact that this disclosure has no evidentiary value and is nothing but a scrap of paper. The above finding of the Tribunal has been accepted. It is not challenged by the revenue that such finding is perverse or is based on irrelevant evidence or no evidence at all.

12. In the view we have taken it is not necessary for us to consider whether pendency of proceedings under Section 271(4A) excludes the operation of Section 271(1)(c).

13. We hold that on the admitted and unchallenged facts the conclusion of the Tribunal that the provisions of Section 271(1)(c) were not attracted cannot be held to be erroneous. To the extent as indicated above we answer the question in the affirmative and in favour of the assessee. There will be no order as to costs.

Banerji, J.

14. I agree.


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