1992 (6) TMI 97 - AT - Income Tax

Tribunal upholds profits addition for G.I. pipes supply but dismisses penalty for income concealment.

KT. Palod. Versus Income-Tax Officer.

The Tribunal upheld the addition of Rs. 38,820 as profits from the supply of G.I. pipes for the assessment year 1982-83. However, it dismissed the penalty ... Cash Basis, Penalty Proceedings Issues Involved:1. Addition of Rs. 38,820 as profits from the supply of G.I. pipes.2. Penalty under section 271(1)(c) for concealment of income.Detailed Analysis:1. Addition of Rs. 38,820 as Profits from the Supply of G.I. Pipes:The assessee, an individual engaged in the business of oil engines, machines, spare parts, and insecticides, supplied G.I. pipes to the Executive Engineer, Zilla Parishad. The payments received amounted to Rs. 3,12,000 against supplies worth Rs. 2,73,271, resulting in a profit of Rs. 38,820. The Income Tax Officer (ITO) added this amount as taxable profit for the year, asserting that the contract was for supply and the profit was realized upon supply. The assessee, however, treated this amount as a credit balance in the account of the Executive Engineer, arguing it was part of a running account and would be squared up against future supplies. The assessee did not press this ground before the Commissioner of Income Tax (Appeals) [CIT(A)], leading to the finalization of the addition for the assessment year 1982-83. Consequently, the assessee claimed and was allowed a deduction of the same profit for the assessment year 1983-84.2. Penalty under Section 271(1)(c) for Concealment of Income:The ITO imposed a penalty of Rs. 51,242 under section 271(1)(c) for the alleged intentional concealment of income of Rs. 38,820. However, the CIT(A) canceled this penalty, and the department appealed against this cancellation. The Tribunal upheld the CIT(A)'s order, concluding that there was no deliberate and intentional concealment of income. The Tribunal noted that the assessee treated the transactions on a cash basis, as evidenced by the ITO's findings. The credit balance of Rs. 38,820 was offered as income for the assessment year 1983-84, and the assessee had sought a deduction for this amount to avoid double addition, which the ITO accepted. The Tribunal emphasized that the assessee did not press the ground before the CIT(A) because the relief was already obtained for the subsequent year.The Tribunal referred to several judicial precedents, including CIT v. Net Ram Ram Swarup, Sir Shadilal Sugar & General Mills Ltd. v. CIT, and CIT v. Vinaychand Harilal, to support its decision that mere failure to prove the nature and source of income does not automatically imply deliberate concealment. The burden of proving concealment lies with the revenue, and the assessee had provided a plausible and bona fide explanation. The Tribunal concluded that the facts of the case did not attract Explanation 1 to section 271(1)(c), which deals with failure to offer a bona fide explanation or to substantiate it.Conclusion:The Tribunal dismissed both the assessee's appeal against the addition of Rs. 38,820 and the department's appeal against the cancellation of the penalty under section 271(1)(c). The Tribunal upheld the CIT(A)'s order, finding no deliberate or intentional concealment of income by the assessee.