TaxTMI 
TaxTMI 
1985 (4) TMI 329
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.... V.R. Mistry carried on business as silversmith at Palitana. He was mainly doing work of preparing covers of silver for the jail idols. In the year 1976, there was a search by the customs department. During the course of search, duplicate books of account, etc., as discussed in the body of assessment order for the assessment year 1970-71 were found and seized. The books of account were found from the possession of Shri Amritlal Hathichand Shah, a friend of the deceased. The deceased also admitted during the course of inquiries by the customs department that the duplicate books were kept at a friend's place for fear of detection by the income-tax authorities in case of raid by that department at his house. All these and other material facts ....
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....enough to state that in view of the decision of the Hon'ble Gujarat High Court in the case of CIT v. Sumantbhai C. Munshaw [1981] 128 ITR 142, he would not address the Court on the legality of the orders passed on one of the legal heirs of the assessee. However, he hastened to state that he is not giving up this ground. As regards the merits of the case, the learned counsel for the assessee invited my attention to the letters dated 15-3-1982 and 22-3-1982 written to the ITO in response to the show-cause notice issued under section 274/271(1)(c) of the Act, the relevant portions of which are reproduced below : Letter dated 15-3-1982 : The cases were reopened as a consequence of ledgers for ST 2026 to 2030 and other data seized by the c....
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....nses Rs. 51,664 Surplus Rs. 15,901 1974-75 7,321 11,160 Sales Rs. 47,232 Gross profit (23 per cent) : Rs. 10, 863. But the receipts/expenses as per seized books are disbelieved and gross pro-fit adopted as per seized books the position is : Receipts Rs. 47,232 Expenses Rs. 43,713 Surplus Rs. 3,191 The Income-tax Officer passing the orders under section 148 have considered in various years the receipts/income revealed by the seized books as real one. In spite of this belief, the income of the deceased as revealed in seized books is not accepted be....
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....ll the years, i.e., from the assessment years 1970-71 to 1975-76. 4. The learned counsel for the assessee vehemently argued that since the difference between the income returned and that assessed was mainly due to the estimation of income by the ITO, no penalty could be imposed under section 271(1)(c). According to the learned counsel for the assessee, if the seized books were to be treated as genuine, the ITO should have framed assessments on the basis of the seized books instead of estimating the income at a higher rate of gross profit in the manner he did. The learned counsel for the assessee also highlighted the fact that while framing the assessment for the first two years under appeal, the ITO has totally ignored the expenses incur....
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....t preferred appeals in the quantum proceedings as they were not fully aware about the business activities of the deceased and no useful purpose would have been served in prolonging litigation. 5. I have carefully considered the rival submissions of the parties as well as the material on record, and I am of the opinion that in view of the aforesaid decision of the Hon'ble Gujarat High Court, there is no infirmity in the order of the AAC in respect of the legality of the orders passed on one of the legal heirs of the assessee. As regards the merit of the case, I am of the view that this is not a fit case for imposing penalty under section 271(1)(c). I have come to this conclusion as I find from the records that the ITO himself has not give....