TaxTMI 
TaxTMI 
2006 (8) TMI 156
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....s right in law and on facts in cancelling the penalty levied under section 271(1)(c) of the Act when no correct and complete accounts were maintained and the book results had been rejected from year to year and substantial additions made were accepted by the assessee and that inspite of this the assessee persisted in maintaining the books of account in the same way?" 3. The short facts, leading to the present reference, are that the assessee which is in the hotel business, for the accounting year 1967-68, submitted its returned income, the Income-tax Officer noted that the assessee had disclosed the total sales of Rs. 19,55,651/- as compared to Rs. 17,70,504/- for the earlier year but the gross profit was reduced to 24 per cent. in compa....
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....86. The said judgment stands reported in Addl. CIT v. Chandravilas Hotel [1987] 165 ITR 300 (Guj). The Division Bench of the High Court found that the Tribunal was unjustified in holding that the penalty could not be imposed. The High Court made various observations in its order including the observation that the approach of the Tribunal, in examining the question whether levy of penalty was justified, was erroneous and illegal. The High Court observed that in penalty proceedings the burden was upon the assessee to prove that he acted bona fide and there was no fraud or misrepresentation on his part and for those reasons the penalty could not be imposed. The High Court, after recording its deliberated findings, observed that the matter dese....
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....e same manner though they were found unreliable was one of the factors which had gone into consideration in levying penalty, and this factor had been completely overlooked by the Tribunal while setting aside the order of the Inspecting Assistant Commissioner and cancelling the penalty imposed by him. 8. We have gone through the order passed by the Tribunal. With due respect to the Tribunal, we must say that it has ignored the mandatory direction issued by this court. Not only this, it has conveniently ignored the observations made by this court by not taking into consideration the findings recorded by the Inspecting Assistant Commissioner and the reasons which persuaded him to culminate the proceedings against the interests of the assess....
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.... has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section." 9. After considering the pros and cons al,1d the foundation on which the penalty proceedings were commenced, the High Court recorded its opinion that the assessee was a persistent defaulter for earlier years, it did not submit its income-tax returns, and every year there was an addition to the income by way of some percentage. The High Court observed that, if that was so, then this conduct....
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....ssessing Officer that the returned income was properly shown and there was no concealment. We could understand that there was a bona fide mistake or lapse on the part of the assessee and that there was no fraud or gross or wilful neglect on its part if the case was for one year only. If for six years the accounts were maintained in the same form and every year assessments were framed with the help and assistance of section 145(1) of the Act, then at least some order should have worked as an eye-opener for the assessee. Every year the assessee was repeating the same trend and still it wanted to say that it had not concealed the income or there was no fraud or gross or wilful neglect on its part. 11. Assuming for a minute that there was no....