TaxTMI 
TaxTMI 
1982 (6) TMI 18
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....g account, personal, account of the partners, etc., were filed, but no balance-sheet appeared, to have been filed along with the return of income. The hearing was adjourned from 13th June, 1967, to 24th June, 1967. On that day the: scrutiny of books by the ITO revealed certain cash credits in some closed accounts, which the assessee was called upon to explain. Thereafter, some notices were issued by the ITO, which were not replied to. It is common ground that no satisfactory explanation was given at the said hearing regarding the cash credits. On 24th February, 1968, one of the partners of the assessee attended and filed a revised return showing an additional income of Rs. 60,000. In a statement accompanying the revised return the assessee admitted that there were some unvouched sales which were not accounted for in the books of account and which were shown as advances from certain parties and that these sales were disclosed in the revised return in the assessee's general trading account. What was submitted was that these unvouched sales were not properly disclosed in the books of account of the assessee by reason of the error of the accountant (Mehtaji), which explanation was reje....
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....at as a separate addition by way of extra gross profit on an estimate had been made by him in the general trading account of the assessee, he did not further add the amount of Rs. 60,000 to the disclosed income of the assessee, and he deleted the addition made by the ITO. It may be mentioned here that the AAC held that the amount of sales in the general trading account should be adopted at Rs. 8,05,036 in the place of the disclosed sales of Rs. 7,80,678. The AAC also adopted the figure of 17 per cent. as an estimate of the gross profits on the sales in the general trading account. As a result, in the place of the amount of Rs. 1,42,358 added by the ITO, he only added the amount of Rs. 84,358 to the disclosed income of the assessee. No appeal was preferred by either side against this order. As far as the assessment year 1967-68 is concerned, all that is material is that in place of Rs. 36,691 added by the ITO to the disclosed income of the assessee, the AAC only upheld addition of Rs. 13,349, being the amount of profits on the admittedly suppressed sales. There was an appeal against this order preferred by the Revenue to the Income-tax Appellate Tribunal, but the same was dismiss....
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....porary advances. The assessee further admitted that it was for this reason that the revised return of income was filed. The Tribunal, however, reduced the penalty in respect of the assessment year 1966-67 to Rs. 20,000, but upheld the penalty at Rs. 10,000 levied for the assessment year 1967-68. The submission of Mr. Dastur, learned counsel for the assessee, is that the entire proceedings levying penalty are vitiated because the notice for giving reasonable opportunity to the assessee to show cause against the levy of penalty was issued by the ITO on the footing of his conclusion that there were suppressed sales of Rs. 60,000 in the cement trading account, whereas the AAC took the view that these suppressed sales were not in the cement trading account but in the general trading account. It was further contended by him that the whole basis of the said notice had been rendered nugatory, because the AAC, in respect of the assessment year 1966-67, had not added Rs. 60,000 as the income on account of suppressed sales, but stated that he was not making the said addition as he was of the view that this amount was covered in his estimate of sales in the general trading account and the g....
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.... whether these sales were suppressed sales and whether they resulted in a, profit of Rs. 60,000 for the assessment year 1966-67 and of Rs. 13,348 for the assessment year 1967-68. In fact, the assessee should not have shown any cause, because these facts were admitted by the assessee. The only explanation which the assessee could give was as to whether these suppressions were made deliberately or as a result of inadvertent errors in its books of account. In respect of this, it makes no difference whatsoever as to whether the suppressed sales were alleged to be in the cement trading account or in the general trading account. Both these accounts were covered under the head of income from business or profession. We fail to see how it can be said that the assessee did not, have a reasonable opportunity to show cause against the levy of penalty or that the whole basis on which the notice for the levy of penalty were issued was altered by the appellate orders. We may now come to certain cases relied upon by Mr. Dastur. In CIT v. Lakhdhir Lalji [1972] 85 ITR 77 (Guj), the ITO added a sum of Rs. 58,000 to the disclosed income which he held the assessee had realised by the sale of 1,383 b....
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....essed them, whereas penalty was levied on the footing that he had undervalued his closing stock, which was a different thing altogether. However, in the present case, notice of penalty has been issued on the ground of suppressed sales and the penalty has been imposed on the same ground, the only difference being that at the time when the penalty notice was issued the suppressed sales were held to be in the cement trading account, whereas the IAC found them to be in the general trading account. Mr. Dastur next relied upon a decision of the Calcutta High Court in CIT v. C. K. Naha & Bros. [1979] 117 ITR 19, where it has been held that it is not the satisfaction of the IAC in the course of penalty proceedings that the assessee has concealed a particular income, but the satisfaction of the ITO in the course of assessment proceedings that the assessee had concealed a particular income, which confers jurisdiction on the IAC to deal with penalty proceedings against an assessee, provided, however, the other two conditions are satisfied. The IAC can decide only the particular charge of concealment of a particular income referred to him by the ITO. The Department must also prove that part....