1996 (1) TMI 147

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....s under section 271(1)(a) were initiated in the original assessments for the two years in question. 3. The assessee is a registered firm. The previous years, for the assessment years 1981-82 and 1982-83, ended on 31-3-1981 and 3 1-3-1982 respectively. The original assessments were completed on 19-3-1983 and 6-1-1987 respectively for the two years in question. There was a survey under section 133A in the business premises of the assessee on 18-10-1988. In the course of the survey it was noticed that the closing stock declared by the assessee for the assessment years 1981-82 and 1982-83 was less than the closing stock declared before the Commercial Tax Department. Hence, the assessments were reopened under section 147(a) of the Income-tax ....

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....declared to the Commercial Tax Department. The deficiency in stock being Rs. 75,721 was covered up in the extra sales of Rs. 1,20,000 declared. As such, it was contended on behalf of the assessee, that no addition was called for on this ground. During the survey it was noticed that in the account of M/s. K.S.F.I.C., Dandeli, the amount shown as due as on 31-3-1984 was more than what was actually due as on that date. When enquired into, it was found that during the assessment years 1980-81, 1981-82 and 1982-83, the assessee had paid Rs. 1,30,075 outside the books. The assessee filed revised return offering Rs. 36, 100 for tax, for the assessment year 1981-82 and Rs. 32,800 for assessment year 1982-83 for tax, in addition to the income dec....

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....tion of penalty proceedings under section 271(1)(a) in the course of the original assessment proceedings. It is argued that in the original assessment proceeding under section 143(1)(a) no penalty proceedings, for the assessment years 1981-82 and 1982-83, were initiated. The learned counsel for the assessee admitted that for the assessment year 1981-82 the return was due on 31-7-1981 but was filed on 18-2-1983 and, for the assessment year 1982-83, the return was filed on 20-1-1986 whereas it was d due to be filed on or before 31-7-1982. The proceedings under section 148 notice were initiated on 9th January, 1988 and were completed on 21-3-1989 and 20-1-1989 respectively. The assessments, under section 143(1) were completed on 19-3-1983 and ....

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....ot have known what was the actual income of the assessee for the two assessment years under consideration. According to the learned departmental representative there are honest and dishonest taxpayers. According to him, the law does not prevent the taxing authorities from initiating penal proceedings under section 271(1)(a) on the basis of the income returned in the revised returns in response to notice under section 148. For this proposition, he placed reliance on the judgment of the Supreme Court in the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 64 Taxman 442, particularly the observations at page 455. He further argued that the commentary at page 5855 of Chaturvedi and Pithisaria on Income-tax Law is based on the decision of the Cal....