1986 (9) TMI 98

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.... income of Rs. 40,100 and the gross profit worked out at 6 per cent and subsequently the quantum was reduced by the Tribunal in second appeal bringing gross profit rate at 5 per cent. The ITO thereafter initiated penalty proceedings against the assessee and he was of the opinion that the assessee's books did not disclose a true state of affairs and the income returned by the assessee by less then 80 per cent of the income assessed, therefore, the case of the assessee fell within the ambit of Expln. to s. 271(1)(c) and the failure on the part of the assessee to return correct income wholly due to fraud or gross or wilful neglect on his part and he was, therefore, guilty of concealment of income. He strongly placed reliance in the case of Dur....

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....were rejected by the ITO and the assessee agreed to estimation of his income, this was enough to prove concealment and whether the ITO could intiate penalty proceedings. The Hon'ble Supreme Court upheld the finding of the Hon'ble High Court in the case of CIT vs. Prem Prakah S.L.P. (Civil) Nos. 9492-9494 of 1981, whereby their Lordships of Hon'ble Allahabad High Court has taken a decision that in similar circumstances no penalty is liveable. The authorised representative for the assessee further contended before us that the Board had issued a Circular No. 22-D (LXV-25), dt. 16th Dec., 1967. In this circular the Board issued the directions to the lower authorities to the effect that reasonableness or otherwise of gross profits or reasonablen....

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....on the facts of the case penalty was liveable and the AAC has correctly sustained it. It was pointed out that before 1976 the assessee filed the return and old Explanation was applicable and further more the circular relied upon by the assessee was not applicable in the relevant assessment year and at the time of making additions, assessment was made at Rs. 15,000 which was cent percent to the income upheld by the ITO and in the end it was contended that burden lay on the assessee to prove that the income was not concealed and in support of his contention, he placed reliance on the decision reported in the case of Kedar Nath Ram Nath and Swatantra Confectionery Works. 6. In reply, the authorised representative for the assessee contended ....