TaxTMI 
TaxTMI 
1978 (8) TMI 43
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....arch,1969. On an examination of the accounts, the ITO found two credits in the folio opened for M/s. Kottayam Rubber Company to the following effect : Rs. (1) 9-12-1968 3,129 (2) 12-12-1968 2,500 ---------------- Total 5,629 ----------------- These credits were wiped off by debit entries on December 25,1968, for Rs. 3,000 and on March 31, 1969, for Rs. 2,629. The officer grew suspicious in regard to the debit entries, and called upon the assessee to explain the cash credits and how they were squared up. It was then admitted before the officer that the credits represented the income of the assessee and that the debits were fictitious. The plea was that it was so done the clerk without the knowledge of the assessee, and on account laxity on the part of the managing partner to check up the cash balance as per accounts. The Explanation was rejected by the ITO, and the amount of Rs. 5,629 was added back. There was no appeal against the assessment. Penalty proceedings were initiated for concealment of income and the case was referred to the IAC who found concealment of income and imposed the penalty of Rs. 8,500. The assessee appealed to the Tribunal. The Tribunal to....
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....red to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished. Explanation.--Where the total income returned by any person is less than eighty per cent. of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under section 143 or section 144 or section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which 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." The section has been amended with effect from April 1, 1976. But as the amendment is immaterial for the purposes of this case, we are leaving it out. The order of imposition of the penalty with which we....
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....imum penalty prescribed by the said sub-clause is the amount of such 'total income' and that the maximum penalty prescribed is twice that amount. In support of this contention counsel for the assessee relied strongly on certain observations of a Division Bench of the Lahore High Court in Nagin Chand Shiv Sahai v. Commissioner of Income-tax [1938] 6 ITR 534, 535 (Lah). In our opinion, that decision is of no assistance at all to the assessee. The question that fell to be considered by the Lahore High Court in that case was whether under section 28 of the Indian Income-tax Act, 1922, a penalty could be imposed against an assessee who had deliberately put forward certain false claims for deductions. Rejecting the contention put forward by the assessee that the word ' income' was used in section 28 (Indian Income-tax Act, 1922) in its popular sense as meaning only money received by the assessee and that it did not refer to any deduction or exemption claimed by him, the Division Bench stated as follows : 'If the interpretation put upon the word by the assessee be adopted it would lead to absurd and anomalous results. An assessee would in those circumstances be at liberty to forge his ....
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....e fail to see how the said observation made by the learned judges of the Lahore High Court is of any assistance to the assessee in this case. In the present case, the liability of the assessee for being subjected to the imposition of a penalty under section 271(1)(c) stands concluded by the finding recorded in that behalf by the Tribunal and the question raised before us relates only to the quantum of the penalty that may be levied under sub-clause (iii) of the said section. The answer to the said question depends on the interpretation to be placed on the said sub-clause. " There are decisions which recognise that for purposes of the I.T. Act even a " nil " assessment has to be regarded as an assessment in the eye of law. See Esthuri Aswathiah v. CIT [1961] 41 ITR 539 (SC) and CIT v. Bidhu Bhusan Sarkar [1967] 63 ITR 278 (SC), both decisions of the Supreme Court. See also V. S. Sivalingam Chettiar v. CIT [1966] 62 ITR 678 (Mad), CIT v. Bankipur Club Ltd. [1968] 67 ITR 491 (Pat), etc. In the circumstances, it seems to us to make little difference that although there is a concealment within the meaning of s. 271(1) the said concealment, would not, even if the concealed income b....