1981 (1) TMI 99

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....dry creditors of the assessee was M/s. Aradhana Rubber Stores, Kanpur, with credit balance of Rs. 15,673 on account of alleged purchase of rubber soles. The ITO, on enquiry by the Inspector, found that the said sundry creditor was not available at the address shown in the books of the assessee. After some efforts to produce the said creditor, the assessee produced one Sri Jamir Ahmed stated to be carrying on the business in the name of M/s. Aradhana Rubber Stores. The said person was examined on oath by the ITO. The ITO, for the various reasons given by him in the assessment order came to the conclusion that the alleged purchase of Rs. 15,673 were bogus purchase debited to the assessee's account to suppress the profits. He accordingly added....

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....t, supports the contention of the appellant that it was not a bogus purchases. It is not the case of the ITO that no goods at all were purchased. The fact that the payments have been made by cheques in respect of these purchases, is another factor which should be taken into account while considering the question of penalty. The amounts surrendered by the partner as unexplained cash credit also does not call for levy of penalty in the facts of this case. Looking to the smallness of the amount and the possibility of availability of the funds with her, it will be difficult to conclude that the amount actually represented concealed income of the appellant firm." 5. In the appeal before the Tribunal, the Deptl. Rep. has urged that since the i....

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....the income assessed stands at Rs. 38,860, the Explanation to s. 271(1)(c) of the Act is attracted in the present case. As such, the on us was on the assessee to prove that the failure to return the correct income was not due to any fraud or gross or wilful neglect. As rightly argued by the Deptl. Rep. the said onus has not been discharged by the assessee in the penalty proceedings. The ITO issued the show-cause notice to the assessee as to why penalty be not levied against it under s. 271(1)(c)of the Act. The assessee neither appeared before the ITO nor did it file any reply to the show-cause notice before the ITO, what to say of leading any evidence before him to displace the said onus. Further the interference drawn by the AAC in the pena....