TaxTMI 
TaxTMI 
1990 (6) TMI 87
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....s and rice bran. 3. The Income-tax Officer, after examining the production records of the assessee, felt that it was not full and complete and did not bring out true production of oil, khali and soap and, therefore, he made the following additions to the assessee's trading results on the basis of comparable cases and assessee's own past history: Rs. (1) Groundnut oil a/c 3,79,105 (2) Groundnut khali a/c 22,640 (3) Rice bran oil a/c 6,22,050 (4) Soap a/c 3,33,432 4. The assessee challenged the above additions in appeal before the Appellate Assistant Commissioner, who, after hearing the assessee at length, sustained the following additions in different accounts : --- Rs. (1) Groundnut oil a/c 1,76,085 (2) Groundnut khali a/c 16,250 (3) Soap account 70,224 In respect of rice bran oil a/c, the entire addition made by the Income-tax Officer was deleted. 5. Against the aforesaid order of the Ld. CIT (Appeals) there were cross appeals to the Tribunal both by the assessee and the department. The Tribunal vide its order in ITA No. 577 (All.) of 1976-77 and ITA No. 614 (All.) of 1976-77 dated 21st July, 1980 confirmed the following additions to the asse....
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....l Institute, Kanpur and a letter from U.P. Oil Millers Association. With regard to the soap account, it was specifically stated that it had not used filler and, therefore, the presumption made by the Assessing Authority regarding under-production of soap was wrong. In support of it, the assessee again filed a certificate from Harcourt Butler Technical Institute to support its case. According to the assessee, the soap made by it was pure and of a very good quality as would be clear from the average sale price of the soap and so the charge of under-production was not sustainable. Further prayer was made that so long as the appeal was pending before the Tribunal, presumption of concealment may not be raised, because the propriety of the additions itself was under challenge. 7. It appears that there were no further proceedings before the Inspecting Assistant Commissioner after the filing of the aforesaid letter. In the meanwhile, the Tribunal's order in quantum appeal came to be passed as noted earlier on 21st July, 1980. As the law had undergone change in between, the penalty proceedings were transferred from the file of the Inspecting Assistant Commissioner back to the file of the....
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....s incurred by the assessee during the accounting period under consideration was Rs. 1,62,255 only and to this loss was added the brought forward loss of Rs. 8,27,650. A note was given on the face of the return that the aforesaid loss or loss as determined by the ITO, whichever might be the correct figure, might be taken. The returned loss of Rs. 9,81,906, thus, consisted of loss of this year amounting to Rs. 1,62,255 and the brought forward loss of Rs. 8,27,650. As the return on its face itself indicated that Rs. 8,27,650 represented the loss of earlier years, no facts were either concealed from the ITO in this regard nor were twisted as alleged by the Revenue. The aforesaid sum of Rs. 8,27,650 could not, therefore, be the subject matter of penalty. The loss of Rs. 1,62,255 as shown by the assessee had, of course, not been accepted by the department and additions as indicated above have been made, as a result of which, instead of there being loss, there would be a positive income for the year under consideration, which, after setting off against the loss of earlier years, would be reduced to nil income. The quantum of penalty and the approach of the ITO was thus, according to the a....
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....ers regarding production of groundnut seeds etc. and there were cuttings, over-writings etc. therein and when the assessee was called upon to support his stand that the aforesaid cuttings etc. were clerical errors, committed through mission and the assessee was required to produce the supporting vouchers on the basis of which the original entries might have been made and then corrected on the basis of the correct vouchers, these vouchers of original entry were deliberately withheld by the assessee from the scrutiny of the assessee in authority, first Appellate Authority as also the Tribunal. In the face of the aforesaid findings of the Tribunal with regard to the manipulation in the books of account of the assessee and its conduct, the finding of the Ld. AAC that the addition was a mere estimate was, prima facie perverse, for the estimate in question was not made without any material, but on the basis of the mistakes in the books of the assessee and the evidence available on record and referred to in detail by the Tribunal in its order. It was a mere guess work. Such addition on estimate is much different from the addition made for example on the short ground that quantitative d....
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...., is satisfied that any person---- (a) ...... (b) ...... (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty---- (i)....... (ii)....... (iii) in the cases referred 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. " The aforesaid amendment in clause (iii) was brought about by the Finance Act, 1968 with effect from 1st April, 1968. Prior to this clause (iii) read as below : " in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent, but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income. " Laying emphasis on the underlined portion as above, it was submitted by the learned counsel for the assessee that unless there was tax payable by a person, the....
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....automatic attraction of the liability, but the quantification of the liability may lead to no penalty being levied. As we pointed out already, if in every case the quantification of penalty will lead to a nil amount, it is reasonable to construe that the liability to penalty itself is attracted only when tax is payable by an assessee. This conclusion of ours is in consonance with the object of the section, namely, to prevent evasion of tax. Once it is found that no tax is payable, there is no question of evasion of tax and consequently there could be no attempt to prevent such evasion. In our view, the very structure of the language of section 271(1) does not admit of such compartmentalisation as clauses (a), (b) and (c) creating in themselves a "penal liability" in abstract, and clauses (i), (ii) and (iii) in themselves quantifying the penalty for the liability and yet where no tax is payable, the penalty being "nil" in every case, thereby rendering the penalty only a technical and purposeless one. As a matter of fact, the amendment of clause (iii) of section 271(1) by section 19 of the Finance Act of 1968, with effect from April 1, 1968, will support our conclusion in this behalf....
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....iii) of this sub-section, the expression 'the amount of tax sought to be evaded', (a) in any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished exceeds the total income assessed means the tax that would have been chargeable on the income in respect of which particulars have been concealed of inaccurate particulars have been furnished had such income been the total income ;" The aforesaid Explanation 4 has been put in to make the amended clause (iii) workable and, therefore, amended clause (iii) may also be noted at this stage as below :----- " S. 271(1) If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act is satisfied that any person---- (a) ...... (b) ...... (c) has concealed the particulars of his income or furnished inaccurate particulars of his income or furnished inaccurate particulars of such income. (i)....... (ii)....... (iii) in the cases referred 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 tax sought to be evad....
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....ves that he was not guilty of any fraud or any gross or wilful neglect in filing the return of his income. The Explanation exhausts itself once this purpose is achieved, and does not create any further fiction to the effect that the assessed income has to be taken as the correct for purposes of imposition of penalty under section 271(1)(c)(iii). For purposes of fixing the quantum of penalty under section 271(1)(c)(iii), the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished, has to be found by the authority concerned. " Similar interpretation on the scope of the Explanation to section 271(1)(c) has been given by the Hon'ble Madras High Court in the aforementioned case of M. Radhakrishniah. Relying on the aforesaid two authorities, the learned counsel for the assessee submitted that the order of the ITO could not be supported for the simple reason that he had proceeded on the footing as if the Explanation to section 271(1)(c) extended further fiction of fixing the amount of concealed income also which clearly it did not. Therefore, according to the learned counsel, there was no question of restoring the order of the ....
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....ut seeds and groundnut oil. The benefit of this report should have been given to the assessee. It was also pointed out by the assessee's learned counsel that heavy addition of more than Rs. 6 lacs had been made by the ITO in the Rice Bran account, where also there had been cuttings and erasures etc. The entire addition was deleted by the Ld. AAC and the Tribunal confirmed the Appellate Assistant Commissioner's judgment in this regard. This went to show, according to him, that the mere fact of erasures does not suggest an act of concealment. According to the assessee's learned counsel the assessee's employees might have been inefficient and the assessee may not have proper control over them on account of which there were cuttings and erasures, but that is not the same thing as committing a fraud or gross or wilful neglect. In support of the above proposition, the learned counsel relied upon the following authorities : 1 . CIT v. Harnam Singh & Co. [1977] 106 ITR 532 (All.), 2. Addl. CIT v. Horilal Kunj Behari Lal [1977] 106 ITR 720 (All.), 3. CIT v. Babu Ram Ajit Prasad [1977] 106 ITR 818 (All.), 4. CIT v. Kedar Nath Ram Nath [1977] 106 ITR 172 (All.), 5. CIT v. K.L. ....
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....ce to the tax payable by the assessee. That argument was no more available after the amendment of clause (iii) by Finance Act, 1968. Now penalty was income based and, therefore, what had to be found out was whether there was any income concealed, and if the answer was that income had been concealed, penalty equivalent to the income concealed would be the minimum that would be imposable on the assessee. It was of no consequence, in this connection, as to what was the ultimate result of the computation of total income of such concealment. The ultimate total income might be a nil figure or a negative figure, but the act of concealment did not disappear because of this. Even the effect of this concealment did not disappear because the evasion of tax was there. It may be manifest in the year of account or in subsequent years. After all concealment of income and reducing thereby the total income to nil or increasing the loss was not an idle exercise indulged in by the assessee for the sheer pleasure of manipulation with the figures. It did have a tangible effect on the taxability of the assessee. Therefore, it would be entirely wrong to say that there could be no effect on tax liability ....
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....nd it is because of this that the above opinion has been expressed by their Lordships. They never considered the provisions of section 271(1)(iii) as were in vogue with effect from 1-4-1968 to 31-3-1976 and, therefore, the aforesaid judgment could not be the authority in support of the assessee's case. 20. The learned Departmental Representative drew our attention to the judgment of the Hon'ble Kerala High Court in the case of CIT v. India Sea Foods [1976] 105 ITR 708, wherein their Lordships have held that for the purpose of imposing penalty under section 271(1)(iii), one had to look at the concealed income and not at the total income. Total income may or may not be a positive figure, but if there was concealed income there would be imposition of penalty. The above viewpoint has been reiterated by their Lordships of the Hon'ble Kerala High Court in CIT v. Rowther Bros. [1979] 119 ITR 353, wherein their Lordships have clearly pointed out while interpreting the amended provisions of section 271(1)(iii) with effect from 1-4-1968 that total income of assessee was irrelevant for the purpose of determining quantum of penalty. Total income of assessee may be below the taxable limit, b....
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....ge of clause (iii) of sub-section (1) of section 271 as it stood with effect from 1-4-1968 suggested that in addition to tax payable, penalty equal to the amount of concealment would also be imposed taking it to be the minimum figure. It did not say that if there was no tax, penalty would not be imposed. The entire purpose of change in law on 1-4-1968 would be defeated if the law was interpreted in the aforesaid manner. In 1976, the law was again amended and the penalty was again linked to tax as measure, but the Legislature did not want to repeat the mistake or the lacuna that existed in the Act prior to 1-4-1968 on account of which if there was no tax payable as a result of final assessment, there would also be no penalty, for penalty was linked with tax as its measure. To avoid the recurrence of the earlier flaw in the law, Explanation 4 was brought in and it is not that Explanation 4 was brought in because even during the period 1-4-1967 to 31-3-1968, the flaw, as noted by their Lordships of the Hon'ble Supreme Court in the case of Mansukhlal & Bros. v. CIT [1969] 73 ITR 546 subsisted. The point made out by the learned counsel for the assessee as to the scope of the Explanation....
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....l Representative with regard to the scope of the present appeal. According to him, the present proceedings are, being continued on account of the order passed on the Miscellaneous petition moved by the assessee wherein it was indicated that there were various mistakes apparent from the original order of the Tribunal, which deserved to be rectified. The Tribunal could, therefore, in the present proceedings only confine itself to the rectification of the said mistakes and it could not proceed further and entertain fresh grounds of appeal or arguments including the one raised by the learned counsel for the assessee as above. 26. On behalf of the assessee, however, it was pointed out that the Tribunal had, by its order, in the Miscellaneous petition referred to above, recalled its earlier order as it was not clear to the Tribunal as to in what manner the mind of the Tribunal when they decided the appeal originally was effected or influenced by the mistakes of omission or commission, which were brought to the attention of the Tribunal, and which were apparent from record. When the original order is recalled, nothing of the original order remains and as such the entire appeal becomes ....
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....Tribunal were such as could be rectified without recalling the order in question, the Tribunal would have done so. In fact, in so many words, the Tribunal discussed the above question as would be clear from the observations made in paragraphs 22.1 and 22.2 of its order. They rejected the Revenue's contention to remove the mistakes and leave the rest of the penalty order, as such. This being so, we are unable to accept the plea of the Ld. Departmental Representative on this account and as such, the preliminary objection raised by him regarding the scope of the present appeal, is decided against the Revenue's stand. In the present appeal, it is open to both the sides to raise all such pleas as they deem appropriate to fortify their respective stands and it would be obligatory on the Tribunal to give its decision on all the issues raised by either sides before it. 27A. In this view of the matter, let us now look at the merit of the legal point made out by the learned counsel for the assessee regarding the leviability of the penalty in the hands of the assessee whose total income for the assessment year under consideration is nil and, therefore, by whom no tax is payable. Before we ....
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....f section 28 of the Indian Income-tax Act, 1922. A comparative study of the relevant parts of the analogous provisions in the two Acts would be clear from the following : Section 28(1) of the Indian Section 271(1) of the Income-tax Act, Income-tax Act, 1922 1961 S. 28(1) If the Income-tax Officer, the S. 271(1) If the Income-tax Officer, or Appellate Assistant Commissioner or the Appellate Assistant Commissioner in the Appellate Tribunal, in the course the course of any proceedings under this of any proceedings under this Act, is Act, is satisfied that any person, satisfied that any person---- (a)..................... (a) .................... (b).................... (b) .................... (c) has concealed the particulars of his (c) has concealed the particulars of his income or deliberately furnished income or furnished inaccurate particulars inacurate particulars of such income, of such income, he, or it may direct that such person (i) .................... shall pay by way of penalty....... in the cases referred to in clauses (b) and (c), (ii)................. in addition to any tax payable by him, (iii) in the cases referr....
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....cealed. Under the amended clause which remained in operation from 1-4-1968 to 1-3-1976, sub-clause (iii) stood as follows :--- " in the cases referred 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. " This substituted clause as can be readily seen from its plain language delinked the imposition of penalty from the tax avoided and, therefore, it is no more relevant for the purpose of quantification of penalty, whether any tax would have been avoided by the assessee if the returned income had been accepted. Whether or not tax had been avoided, the penalty would be quantifiable, with reference to the quantum of income concealed, if concealment is established. This quantification of penalty and change in the law cannot, in our opinion, be negatived or made otiose by treating the preceding phrase "in addition to any tax payable" by the assessee as governing the operation of the entire clause. This part of the clause is merely drawing attention to the fact that penalty would be i....
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....payable on the assessee on the assessed income was nil. To read such a prohibition into clause (iii) of sub-section (1) of section 271 would be introducing words in the section for which there is no warrant or authority. The amendment done by the Legislature would be negatived if interpretation, as above is placed on the wordings of clause (iii) of sub-section (1) of Section 271 as amended with effect from 1-4-1968. 30. The aforesaid system of quantifying penalty was re-amended with effect from 1-4-1976 by the Taxation Laws (Amendment) Act, 1975. The amended clause (iii) with effect from 1-4-1976 read as below :---- " (iii) in the cases referred 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 tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income. " 31. The measure of penalty has, thus, again become the tax sought to be evaded by the assessee as was the position prior to 1-4-1968, but there is one important difference in the two provisions. Under the old provision which was operative from 1-4-1962....
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.... measure of the penalty has now been made the tax sought to be evaded by reason of the concealment of the particulars of his income or the furnishing of inaccurate particulars of such income. 33. The Legislature was aware, while enacting the law as above that there would be situations where even though income had been concealed by the assessee, there might be no tax payable on the finally determined total income and in such a case the amount of tax sought to be avoided by reason of concealment of particulars of his income would naturally be nil, for nil tax was avoided in fact. Apparently, the Legislature did not want this situation to re-emerge and so it brought Explanation 4 to section 271(1)(c) on the Statute Book simultaneously giving meaning to the expression "the amount of tax sought to be evaded". Clause (a) of the said Explanation 4 provided that "in any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished exceeds the total income assessed means the tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished ....
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....any person has concealed the particulars of his income or has furnished inaccurate particulars of such income. In other words, for the purposes of cl. (c), there is no need to find any failure to furnish a return or failure to comply with a notice, etc., which are the necessary ingredients under cls. (a) and (b). Again in the matter of computation of penalty under cls. (a) and (b) it would be seen that under the sub-cls. (i) and (ii) after cl. (c), the penalty imposed is geared to the tax payable or avoided; whereas in the case referred to under cl. (c), it is not necessarily geared to the tax payable, but is in addition to any tax payable (if no tax is payable this will not enter the reckoning), an amount not more than twice the amount of the income concealed or the inaccurate particulars furnished. " Their Lordships then referred to the decision of the Division Bench of the same High Court in India Sea Foods' case and elaborately quoted from the same wherein the contention of the assessee that penalty could not be determined with reference to the concealed income, but had to be determined with reference to the total income, was negatived by their Lordships. They then referred ....
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.... in favour of such compartmentalisation. As we have pointed out already not one of the three clauses (i), (ii) and (iii) of section 271(1) contemplates a penalty unrelated to the tax payable. In such a context, in our opinion it is too technical to construe the section as creating a penal liability in abstract by clauses (a), (b) and (c) and quantifying the said penal liability by clauses (i), (ii) and (iii) of section 271(1). If the reasoning of the Gujarat High Court is to be accepted, the moment anyone of the defaults contemplated by clauses (a), (b) and (c) of section 271(1) has occurred, there is an automatic attraction of the liability, but the quantification of the liability may lead to no penalty being levied. As we pointed out already, if in every case the quantification of penalty will lead to a nil amount, it is reasonable to construe that the liability to penalty itself is attracted only, when tax is payable by an assessee. This conclusion of ours is in consonance with the object of the section, namely, to prevent evasion of tax. Once it is found that no tax is payable, there is no question of evasion of tax and consequently there could be no attempt to prevent such eva....
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....ct from 1-4-1968 regarding section 271(1)(iii) became more explicit in the decision in the case of M. Radhakrishniah. After noting down the provisions of section 271(1)(iii) at page 136, their Lordships proceeded to explain their interpretation of the said clause as below : " There is no mistaking the meaning of the language of section 271(a)(iii) as found in the text. Under this clause, there is both a minimum and a maximum penalty. The minimum penalty is equal to the income in respect of which particulars have been concealed. The maximum is double the income in respect of which particulars have been concealed. It will be seen that in both cases the validity of the penalty depends on its being relatable to the income in respect of which particulars have been concealed. This means that if particulars have been concealed in respect of one rupee of income, the minimum imposition will have to be one rupee by way of penalty .......... If in respect of one rupee particulars have not been concealed, then penalty cannot be levied on that rupee, either at a minimum of one rupee or at the maximum of two rupees or any amount in between. The reason why this penalty provision is so worde....
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....g be the amount of concealment, say Rs. 10 lacs (the quantum of minimum penalty being Rs. 10 lacs), but, if the total income be nil, in the above case (quantum of loss declared being a little more than on identical concealed income, the penalty would be nil, because the tax payable is nil. This result is repugnant to the very scheme of the change in clause (iii) brought about by the Finance Act, 1968. This result becomes all the more accentuated, when we consider clause (iii) as amended with effect from 1-4-1976 along with Explanation 4 thereof. We have indicated above that the situation visualized by Explanation 4 viz., where total income is less than the concealed income will come about when concealed income is set off against losses under heads declared and accepted. Such losses may be less than the concealed income, may be equal to the concealed income and may be more than the concealed income. In the first case, total income would be a positive figure, and may be that tax is payable thereon, if such income is more than the minimum income liable to tax. In the second case, total income will be nil, and in the third case, total income would be minus figure, i.e. loss. According ....
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....above decision was met by the Ld. Departmental Representative by reference to the judgment of the Hon'ble Kerala High Court in India Sea Foods' case, wherein similar reasoning was negatived by their Lordships by observing, inter alia, as follows : " Sub-clause (iii) of section 271(1)(c) states that in cases wherein assessee is found to have concealed particulars of his income or furnished inaccurate particulars of such income, he may be directed to pay by way of penalty, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which particulars had been concealed or inaccurate particulars had been furnished. The words "in respect of which the particulars have been concealed or inaccurate particulars have been furnished" qualify the preceding expressing the amount of the income. By using these qualifying words, Parliament had made it clear that the quantification of penalty under sub-clause (iii) is to be made with reference to that amount of the income of the assessee in respect of which there was concealment of particulars or furnishing of inaccurate particulars. Hence, it was not possible to construe the word "income" occurri....
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....ill have to be found out in the present case as to whether what was concealed by the assessee was an item of "income", and the mere fact that such item of income was set off against earlier year's losses would not make the said item, which had been concealed by the assessee, non-existent. 40. Prima facie, the decision of the Hon'ble Punjab and Haryana High Court appears to give support to the interpretation placed by the assessee, but, in our opinion, that decision has proceeded on the footing that penalty became tax based once again as earlier in between the period 1-4-1962 to 31-3-1968 and that for working out the tax based penalty it was necessary that there should be tax payable, and if, there was no tax payable, according to their Lordships, there could be no imposition of penalty. Their Lordships did not consider the provisions of law as were operative for the purpose of the decision of the reference before them, namely, the law operative from 1-4-1968 to 31-3-1976. Instead, they decided the appeal on the basis of the law operative from 1-4-1976 and on the presumption mentioned above. It cannot, therefore, be regarded as an authority for considering the law during the afor....
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....ncealment of income did arise by the operation of the Statute because the difference between the assessed income and the returned income was more than 20% of the assessed income. 42. According to the ITO, the entire addition made to the assessee's total income on account of low yield of groundnut oil, khali and soap represented concealed income of the assessee, for the unaccounted sale proceeds of the aforesaid is could have, no other character, but that of revenue receipts, which had not been disclosed by the assessee, though corresponding expenditure relating thereto stood debited in the accounts. The Ld. CIT (Appeals) has held and which finding has been supported by the learned counsel for the assessee, that the assessee has been able to show that the addition, in question, was made merely on estimate by rejecting the assessee's accounts and that such addition was not made on the basis of specific instances of sales outside the books of account or specific instances of suppression of production etc. and therefore the assessee had discharged the onus which lay on it by demonstrating as above. 43. Before we adjudicate upon these submissions, let us first look at what the Tri....
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....nt year. This explanation is too general and vague to be of much help, more particularly when the actual purchases made by the assessee during the year under consideration were subject to laboratory analysis the result of which are known to us. The record of the analysis of the actual purchases goes to show, as noted above, that whatever be the quality of the groundnuts crop purchased by the assessee during the year under consideration, in comparison to what it had purchased in the immediately preceding assessment year, its content of kernel was in any case 66.66% of the groundnuts purchased. This is the basic figure from which there is no getting away. So, the explanation that there was a poor crop this year, does not explain the 62% yield disclosed by the assessee. The second explanation given by the assessee's learned counsel was that the moisture contents of the kernel was 13.2% and, therefore, it would not be abnormal if about 4% to 5% moisture got evaporated, more particularly when, during the year under consideration, the assessee had done decortication over a longer period than in the immediately preceding assessment year. Without doubt there is a grain of truth in the abov....
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....urse, to be to the best of the judgment and while doing so due regard has to be given to the technological aspects of the soap manufacturing which has been placed on record by the rival side. In this connection, one thing, which strikes us as significant, is the absence of any denial on the part of the assessee of the averment made by the Income-tax Officer that in order to manufacture soap caustic soda solution of 36 degree BE was the ideal solution and that the consumption ratio of this solution to the oil is 1 : 2, that is, for 1 unit of the above solution of caustice soda 2 units of oil were needed, nor has the assessee disputed the computation given by the Income-tax Officer that 411 qtls. of 36 degree BE solution would absorb 878 qtls. of oil and that in order to prepare the aforementioned quantity of solution it would take 126 qtls. of solid caustic soda and further that 152 qtls. of, solid caustic soda had, in fact, been consumed by the assessee (of this 85 qtls. was directly purchased as solid caustic soda and 159 qtls. was purchased at 45% caustic solution which on conversion would give 67 qtls. of solid caustic soda (149 x 45/100). Again it has not been denied by the ass....
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.... evidence produced by the assessee before the Ld. CIT (Appeals). Admittedly, there is no additional evidence whatsoever led by the assessee before the Ld. CIT (Appeals) in penalty proceedings, which might go to show that the above findings stand dislodged in the penalty proceedings. Even re-appraisal of the facts on record cannot lead in our opinion to any other conclusion than the one reached by the Tribunal in the quantum proceedings. May be, the figures of production, which have been made the basis for penalty are estimated ones, but these estimates have been resorted to on the basis that the assessee's records were full of mistakes, cuttings, overwritings, erasures etc., that the assessee did not produce the books of original entry to justify the said cuttings etc., that the elaborate analysis report of the assessee's production showed much higher production of dana than disclosed by the assessee and that there was no proper explanation from the assessee for the aforesaid lower output and that the non-disclosure of part of dana extracted by the assessee would lead to the natural conclusion that the said dana had been crushed and its product obtained and sold. The above findings....
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....d outside the books of account. The non-existence of the stocks with the assessee in the closing stock indicates the sale thereof outside the books of account not disclosed by the assessee. To say that this is merely an estimate, in the circumstances of the present case, would not be correct. As such, we feel that the Ld. CIT (Appeals) was unjustified on merits in giving the finding that the onus, which was on the assessee, stood discharged with regard to the additions made on account of groundnut oil, khali and soap account. The additions sustained by the Tribunal in quantum appeal with regard to the Moongfali and soap account do, in our opinion, truly reflect the extent of concealed income of the assessee (i.e. Rs. 2,36,375) and, therefore to the extent of the said additions, penalty is imposable on the assessee on the above account in terms of section 271(1)(iii). The departmental appeal, in the circumstances, stands partly allowed. 46. In the assessee's appeal, we do feel that imposition of penalty with reference to the sum of Rs. 5,000 being expenses under the head Basa, and Rs. 5,620 on account of disallowance of General expenses, and Rs. 5,000 on account of expenses incur....