TaxTMI 
TaxTMI 
2014 (9) TMI 822
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.... Whether on facts and circumstances of the case, the Tribunal was right in confirming levy of penalty under Section 271 (1)(c) of the Income Tax Act, 1961? 2. The applicant is an assessee under the Income Tax Act, 1961 (for brevity the Act). He filed returns for the assessment year 1983-84 disclosing income of Rs. 27,165/- and it was processed by the Income Tax Officer, B-Ward, Circle-I, Hyderabad. A revised return was filed showing the income of Rs. 28,980/-. The authorities of the Central Excise Department conducted a search at the shop as well as the residence of the applicant on 5.5.1982. Gold worth Rs. 3,30,400/- and cash of Rs. 2,20,000/- in Indian currency was seized. On receiving intimation about this, proceedings under the relev....
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....tter while dealing with the gold. Learned counsel submits that on the one hand, the gold was treated as the property of the applicant and was assessed to tax; and on the other hand, equivalent amount was disallowed as business loss; resulting from confiscation. He contends that whatever be the circumstances under which such inconsistent views were taken, there was no basis for imposition of penalty, particularly when no finding was recorded to the effect that the Income Tax Officer was satisfied about the concealment of gold. He submits that the applicant was an ordinary assessee, not being under obligation to maintain any books of accounts and the question of concealment of the gold in the income tax returns or the books of account does no....
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....onsistent view is that in a proceeding initiated under that provision are quasi-criminal in nature and the burden to justify the exercise squarely rests upon the revenue. Reference in this context may be made to the judgment of the Supreme Court in ANANTHARAM VEERASINGHAIAH & CO. v. C.I.T. (1980) 123 ITR 457 (SC) After referring to the judgment of this Court in LAGADAPATI SUBBA RAMAIAH v. CIT, reported in (1956) 30 ITR 593 (AP) and that of the Madras High Court in S. KUPPUSWAMI MUDALIAR v. CIT, reported in (1964) 51 ITR 757 (Mad), the Supreme Court held as under: A number of circumstances of vital significance may point to the conclusion that the cash deficit or cash credit cannot reasonably be related to the amount covered by the intang....
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....Act and, conversely, if the profits of an illegal business can be brought or dealt with under the Act, equally the lossess also must be deducted as legitimate expenses in the business. The following paragraph was extracted from the judgment of the Supreme Court in CIT v. S.C. KOTHARI, reported in (1971) 82 ITR 794: the business is illegal, neither the profits earned nor the losses incurred would be enforceable in law. But, that does not take the profits out of the taxing statute. Similarly, the taint of illegality of the business cannot detract from the losses being taken into account for computation of the amount which can be subjected to tax as profits under Section 10(1) of the Act of 1922. The Tax collector cannot be heard to say that h....
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....all not be deemed to be an expenditure incurred by the assessee for the purposes of the business or profession. 12. However, recently, the Supreme Court in DR. T.A. QUERESHI v. CIT (SC) (2006) 287 ITR 547 (SC) , did not find much of difference. Their Lordship treated that the Heroin, a prohibited drug, found in possession of the assessee, is stock in trade and the result of seizure thereof was treated as business loss. In this context, the Supreme Court observed: .. the Tribunal has held that the heroin seized was the assessees stock-in-trade it is implicit that the Tribunal reiterated the view that the assessee was doing the business of manufacture and sale of heroin. Once the income tax authorities record such a finding of fac....
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....t was that the gold and cash are owned by his brother. That plea was not accepted and not only the entire gold was seized, but also a penalty of Rs. 1,50,000/- was levied by the authorities. 17. To the extent the Assessing Authority under the Act added the value of the gold and the cash and added the same to his income, the applicant did make an effort to question it, but is reconciled to the situation. The controversy is now about the levy of penalty. 18. In case there existed any admission on the part of the applicant that the gold was held by him and, being under an obligation to furnish its value in the income tax returns, he did not do so, the allegation as to the concealment would have become acceptable. Though the impact of the....