AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1986 (7) TMI 26
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....te Assistant Commissioner holding that the charge of concealment against the assessee had not been established. Hence, the present references to us at the instance of the Revenue. The assessee is an unregistered firm. It derived during the assessment years income from business in iron, steel sales, pig iron goods, iron pipe ridges, aluminium goods, sand and tank sales. It filed a return for the assessment year 1963-64 showing a total income of Rs. 2,53,703 (This sum included a sum of Rs. 1,00,000). The business premises of the assessee had been earlier raided by the officers of the Sales Tax Department. The officers seized the documents, books and records, etc., which showed that clandestine business was being carried on by the assessee. From the documents seized, the sales tax authorities came to the conclusion that the assessee had been carrying on clandestine business. Subsequently, when the return was filed under the Income-tax Act, the assessee declared that the returned sum of Rs. 2,53,703 (during the assessment year 1963-64) and the sum of Rs. 1, 56,301 (during the assessment year 1965-66) included sums of Rs. 1,00,000 which constituted the clandestine business income of th....
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....ssed sum. It appears, however, that, on appeal against the order of the Income-tax Officer, the assessed sum was reduced by Rs. 65,729. Besides this sum, depreciation was also allowed. On this basis, it was submitted before the Tribunal that the assessee having declared income to the tune of rupees one lakh from clandestine business and Rs. 65,729 (leaving aside reduction on account of depreciation) having been struck down, the discrepancy between the returned and the assessed income would be much less than 20%. The sum of rupees one lakh being the income from clandestine business had been declared by the assessee by estimate. No books of account of the clandestine business was produced. The Income-tax Officer did not accept the declaration of income of one lakh from clandestine business by estimate but increased it to Rs. 1,47,000. The Tribunal knocked off the addition of Rs. 47,000. The assessee had claimed that the sum of rupees one lakh included profit on notional sale also. This claim was not accepted by the Tribunal which added a sum of Rs. 16,000 as profit on notional sales. The Revenue had also added a sum of Rs. 33,193 as estimated profits. The stand of the assessee before....
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....of the revision in the penalty matter, it was found that the Tribunal had set aside the order adding Rs. 16,000 as income of the assessee. The order of the Tribunal in the quantum assessment is not on the record of these references, but that order was in the High Court in CIT v. Standard Mercantile Co. [1985] 153 ITR 105 (Pat) (Taxation Cases Nos. 102 to 104 of 1975), which had been disposed of by this court on July 12, 1984. A perusal of the order of the Tribunal in the quantum assessment matter at paragraph 10 shows that the Tribunal held as follows: " We hold that we have considered this aspect also while upholding the addition in the trading account and in view of that there is no justification for making a separate addition of Rs. 16,000 by way of notional sales profit. " In the face of the above finding, the sum of Rs. 16,000 cannot be the subject-matter of levy of penalty. The Tribunal in clear terms rejected the stand of the Revenue that this sum of Rs. 16,000 was not part of the declared income of Rs. 1,00,000 from clandestine business. Since the said sum of Rs. 16,000 has not been held to be the income of the assessee during the assessment year 1963-64, that cannot be t....
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....essment year 1963-64. Learned counsel for the assessee contended that the assessee may have been dishonest person before the sales tax authorities, but he had redeemed himself by declaring in the return rupees one lakh as income from clandestine business. This submission could have been appreciated, if the assessee intended to make a clean breast of the whole affair. There was no intention of making a clean breast. This is evident from the fact that the books seized by the Sales Tax Department were not produced before the income-tax Authorities even when called upon to do so. He took refuge under a false plea that they had been stolen in transit from sales tax office to his residence. The assessee's statement cannot be taken at its face value. In that background, the addition of Rs. 33,000 odd as income from regular business, though on estimate, must be held to be concealed income. In the background of the entire facts, I have not the least doubt that the assessee would be liable to pay penalty in respect of the addition of Rs. 33,193. That was the concealed income of the assessee. Learned counsel for the assessee contended that the income from regular business having been enhance....